Opinion ID: 2271593
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Heading: Is a loss caused by an uninsured motorist a liability loss?

Text: Having concluded that liability insurance includes UM coverage, we must next determine whether a loss caused by an uninsured motorist is a liability loss under section 11580.9. In interpreting statutes, we must determine legislative intent. In doing so, we first examine the words of the statute, since they are the best indicator of intent. ( People v. Oganesyan (1999) 70 Cal.App.4th 1178, 1182, 83 Cal.Rptr.2d 157, citing Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 826, 25 Cal.Rptr.2d 148, 863 P.2d 218.) Our first step in determining the Legislature's intent is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning. ( Mercer v. Department of Motor Vehicles (1991) 53 Cal.3d 753, 763, 280 Cal.Rptr. 745, 809 P.2d 404.) Of course the commonsense meaning will not prevail if it is obviously contrary to the legislative purpose. ( Oganesyan, supra, at p. 1182, 83 Cal.Rptr.2d 157.) As noted above, the Insurance Code defines liability insurance to include UM coverage. (§ 108.) Such coverage require[s] reimbursement to the insured by his own carrier of the type of loss which would have been covered by an automobile liability policy had the uninsured motorist been in fact insured. ( Farmers Ins. Exchange v. Hansel (1970) 12 Cal.App.3d 570, 573, 90 Cal.Rptr. 654.) Since an insurer pays UM coverage only when an uninsured motorist is liable for damage to the insured, payments under that coverage are liability loss[es]. (§ 11580.9, subd. (d).) In interpreting statutes, we must also read them with reference to the entire scheme of law of which they are a part, so that the entire statutory scheme may be harmonized and rendered effective. ( Calatayud v. State of California (1998) 18 Cal.4th 1057, 1065, 77 Cal.Rptr.2d 202, 959 P.2d 360.) In addition, we must respect the policies the Legislature seeks to implement. ( People v. Navarro (1972) 7 Cal.3d 248, 273, 102 Cal.Rptr. 137, 497 P.2d 481.) Section 11580.8, which is part of the same statutory scheme as section 11580.9, expresses legislative policy concerning allocation of responsibility for liability coverage. It states: The Legislature declares it to be the public policy of this state to avoid so far as possible conflicts and litigation, with resulting court congestion, between and among injured parties, insureds, and insurers concerning which, among various policies of liability insurance and the various coverages therein, are responsible as primary, excess, or sole coverage, and to what extent, under the circumstances of any given event involving death or injury to persons or property caused by the operation or use of a motor vehicle. The Legislature further declares it to be the public policy of this state that Section 11580.9 of the Insurance Code expresses the total public policy of this state respecting the order in which two or more of such liability insurance policies covering the same loss shall apply, and such public policy is not to be changed or modified by any provision of the Vehicle Code except in those express cases where the requirements of Article 2 (commencing with Section 16450) of Chapter 3 of Division 7 of the Vehicle Code apply with regard to a policy of liability insurance certified as provided in Section 16431 of the Vehicle Code. (§ 11580.8, italics added.). We agree with State Farm that by interpreting liability loss to include UM coverage, we inject more certainty into section 11580.9, thereby promoting 11580.8's stated legislative goal of avoid[ing] so far as possible conflicts and litigation, with resulting court congestion, between and among injured parties, insureds, and insurers concerning which, among various policies of liability insurance and the various coverages therein. . . . Such an interpretation allows a court to allocate responsibility for UM coverage by applying the statute, rather than by forcing the parties into protracted litigation. Although no California court has considered whether section 11580.9, subdivision (d) includes UM coverage, the Arizona Court of Appeals analyzed nearly identical language in one of its statutes. (See Nationwide Mut. Ins. v. CNA Ins. Co. (Ct. App.1988) 159 Ariz. 368, 767 P.2d 716.) The Arizona statute read in pertinent part: If two or more policies affording valid and collectible automobile liability insurance apply to the same motor vehicle in an occurrence out of which a liability loss shall arise. . . . (Ariz.Rev.Stat. former § 28-1170.01.A.) Like Progressive, Nationwide argued the Arizona Legislature could not have intended for this language to include first person UM coverage, because a liability loss encompasses only sums an insurer must pay to third persons on account of its insured's acts. In analyzing the question, the court noted that Arizona requires automobile liability policies to include uninsured motorist coverage. ( Nationwide Mut. Ins. v. CNA Ins. Co., supra, 767 P.2d at pp. 718-719, citing Ariz.Rev.Stat. § 20-259.01.A.) It then reasoned nothing in section 28-1170.01 suggested liability insurance, as used in that section, was intended to have a narrower meaning than the meaning required by section 20-259.01 .A, or that the priorities established by that subsection did not apply to all types of coverage. ( Nationwide, supra, at p. 719.) We are of course not bound by a decision of a sister state. ( Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 243, 285 Cal.Rptr. 99, 814 P.2d 1341.) However, we likewise find that California legislative policy, particularly as set forth in section 11580.8, weighs in favor of finding that liability loss includes UM coverage. Our conclusion finds support in a Court of Appeal case that assumed, without deciding, that liability loss under section 11580.9, subdivision (d) is not limited to first person liability coverage. (See Hellman v. Great American Ins. Co. (1977) 66 Cal.App.3d 298, 136 Cal.Rptr. 24.) Hellman involved a dispute between insurance companies as to their responsibility for medical payment coverage. In analyzing the policy term `valid and collectible insurance,' Hellman cited section 11580.9, subdivision (d), which also uses the terms valid and collectible, stating, [t]his section, which applies to a liability loss, is also applicable to medical reimbursement provisions contained in automobile liability policies. ( Hellman, supra, at pp. 304-305, 136 Cal.Rptr. 24.) [4] While this comment was not necessary to the decision and therefore is dictum, it expresses the Court of Appeal's view that section 11580.9 is not restricted to third person liability claims. Progressive counters that if section 11580.9 is read to include UM coverage, the statute would then conflict with section 11580.2, a more specific and comprehensive statute concerning UM coverage. In matters of statutory construction, we must respect any restrictions the Legislature has inserted, and must find that `[a] specific provision relating to a particular subject will govern a general provision, even though the general provision standing alone would be broad enough to include the subject to which the specific provision relates.' ( Schachter v. Citigroup, Inc., (2005) 126 Cal.App.4th 726, 738, 23 Cal. Rptr.3d 920.) Section 11580.2, subdivision (a)(1) prohibits the issuance of any bodily injury liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle unless the policy contains UM coverage (although the statute also permits the parties to agree to exclude such coverage.) Subdivision (c)(2) of section 11580.2 states UM coverage does not apply either as primary or as excess coverage: [¶] . . . [¶] (2) To bodily injury of the insured while in or upon or while entering into or alighting from a motor vehicle other than the described motor vehicle if the owner thereof has insurance similar to that provided in this section. Section 11580.2, subdivision (d) states, Subject to paragraph (2) of subdivision (c), the policy . . . may provide that if the insured has insurance available to the insured under more than one uninsured motorist coverage provision, any damages shall not be deemed to exceed the higher of the applicable limits of the respective coverages, and the damages shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits. (§ 11580.2.) Progressive contends if we find section 11580.9, subdivision (d) controls which of multiple policies providing UM coverage is deemed primary, then we will be negating an insurer's right under section 11580.2 to provide for a ceiling on the limits of its UM coverage and for prorating its coverage with that of other insurers. We disagree. As discussed below, section 11580.9 controls only if two policies apply to the same motor vehicle. Such is not always the case. Indeed, as discussed below, it is not the case here. When section 11580.9 does not apply, if the insurers have included the optional policy language permitted by section 11580.2, subdivision (d), then such language will be given effect. ( Prieto v. State Farm Mut. Automobile Ins. Co. (1969) 268 Cal.App.2d 891, 893, 74 Cal.Rptr. 472.)