Court Opinion

ID: 9747922
Source: CourtListenerOpinion
Date Created: 2023-08-27 15:43:29.546168+00
Date Added: 2024-06-11T07:25:28.883734
License: Public Domain

JOHNSON, Acting P. J.
I respectfully dissent.
I would agree with the majority’s analysis, reluctantly, were this truly an “undeñasmed. motorist” case.1 But this case raises a novel issue, which in my view, when properly resolved leads to the conclusion this is an “uninsured motorist” case. The implications of this difference are both obvious *54and profound. What is that novel issue? When a vehicle owner who has elected to post a cash deposit in lieu of insurance refuses a tender of defense, claims to be “permissibly uninsured” (not underinsured) and that the uninsured driver is liable for the vehicle owner’s share as well as his own share of the injured person’s damages, is that the equivalent of an insurance company “refusing to admit coverage” or only admitting coverage “conditionally or with reservation”? Or, alternatively, is it the substantial equivalent of a company which had written a bond in lieu of insurance “denying] coverage thereunder or refusing] to admit coverage thereunder except conditionally or with reservation”?
If so, that would bring this case squarely within the definition of an “uninsured motor vehicle” in Insurance Code section 11580.2, subdivision (b). This definition reads in pertinent part: “As used in this section, ‘uninsured motor vehicle’ means a motor vehicle with respect to the ownership, maintenance or use of which there is no . . . bond applicable at the time of the accident, or there is the applicable . . . bond but the company writing the . . . bond denies coverage thereunder or refuses to admit coverage thereunder . . . .” (Italics added.)
Here, there is at least a triable issue Enterprise Rent-A-Car Company of Los Angeles in essence refused to admit coverage under its $15,000 cash deposit and thereby converted this vehicle from an underinsured motor vehicle to an uninsured motor vehicle. What Enterprise did was the substantial equivalent of an insurer or a company writing a bond “refusing to admit coverage thereunder.” As the majority opinion itself recites, when the injured person’s lawyer contacted Enterprise, Enterprise claimed to be “permissibly uninsured” (not underinsured) and because of this status claimed it *55had no duty to defend and asked that “CIGA accept the tender of the defense of the claim, . . .” The letter from Enterprise further quoted language from the rental agreement which purported to place the duty on the uninsured driver to “defend . . . [any] claim demands, lawsuits, etc. . . .” as well as the duty to “indemnify, and hold owner harmless from all losses, liability, damages, injuries . . . .” In other words, don’t look to Enterprise’s cash deposit for any payment to the injured party, go directly to the uninsured driver. This constitutes a refusal by Enterprise to admit financial responsibility (the equivalent of an insurance or bond company “refusing to admit coverage”) for the injured party’s damages.
The majority opinion contends the definition of an “uninsured motorist” in Insurance Code section 11580.2, subdivision (b) is somehow superceded by section 11580.2, subdivision (p). The latter provision states: “If the provisions of this subdivision conflict with subdivisions (a) thorough (o), the provisions of this subdivision shall prevail.” But my colleagues assume a conflict where one does not exist. Subdivision (p) defines an “insured motor vehicle” and it defines an “underiasured motor vehicle.” The former is one which is insured, self-insured or for which a financial responsibility bond is posted. The latter is one which is insured but for less than the insured’s uninsured motorist coverage. But nowhere does this subsection define the third category—an uninsured motor vehicle. Subdivision (b) does so and, more importantly, is the only subdivision dealing with the situation where the vehicle is insured, but the insurer refuses to admit coverage. And it deals with that situation by moving the vehicle from the insured category to the uninsured motor vehicle category.
This has implications for both respondents, since uninsured motor vehicles are treated differently from underinsured motor vehicles. When a vehicle is uninsured either because neither the vehicle owner nor the driver had insurance (or posted a bond or cash deposit) or because the insurer or entity posting the bond or cash deposit refused to admit coverage or because the insurer has become bankrupt, the uninsured motorist carrier is entitled, indeed duty bound, to pay its injured insured the full amount of his uninsured motorist coverage. The uninsured motorist carrier can then proceed in subrogation against the owner and/or driver, or against the recalcitrant insurer of either, or against an owner or driver who refused to honor its financial responsibility deposit. That carrier also can proceed in subrogation against CIGA for one-half of the amount it paid out on account of the bankruptcy of the driver’s insurer. (Ins. Code, § 1063.2, subd. (c)(1), quoted in maj. opn., ante, at p. 52.)
In my view, triable issues exist whether Enterprise as the vehicle owner refused to admit coverage under its cash deposit. That denial, coupled with *56the bankruptcy of the driver’s insurer, invoked appellant’s uninsured motorist coverage with Mercury and required Mercury to pay its insured’s damages to the extent of its uninsured motorist coverage, in this case $30,000. If Mercury were to have the opportunity to try its subrogation action and prevailed at that trial it should be entitled to recover $15,000 from Enterprise and $7,500 from CIGA. In my view, it should be given an opportunity to do just that.
On April 24, 2000, the opinion was modified to read as printed above.

Were I to agree this is properly characterized as an underinsured motorist case, I would still write separately to add my support to a recent call from two of the justices in another district for legislative attention to the current provisions governing underinsured motorist coverage.
In their concurring opinion to Farmers Insurance Exchange v. Hurley (1999) 76 Cal.App.4th 797 [90 Cal.Rptr.2d 697], Justices Gaut and Ward of the Fourth Appellate District, Division Two reluctantly concluded they had to “bow to the inevitable and join in the majority opinion.” But then they went on to “encourage the Legislature to consider the wisdom of modifying the section to achieve the apparent purpose of the statute by allowing partial payment by the underinsured motorist’s carrier so long as full credit is given to the injured party’s carrier for the policy limits of the underinsured motorist.” (76 Cal.App.4th at pp. 808-809.)
The instant case illustrates some of the further mischief the present scheme can visit—not only on injured people and insureds, but also insurance companies. Here the injured party’s insurance company tried to do the right thing, only to learn “no good deed goes unpunished.”
Confronted with a vehicle owner who had refused to pay over its $15,000 cash deposit to the injured party, claiming it was “permissibly uninsured,” and with an equally recalcitrant GIGA (California Insurance Guarantee Association) the only other recourse, Mercury Insurance Company considered it had an uninsured motor vehicle on its hands. For reasons explained in this dissent, I believe Mercury was correct in that legal assessment. But at a minimum it ran the risk some court and jury would arrive at that conclusion and award *54damages for its failure to honor its insured’s uninsured motorist claim. On that basis, Mercury presented its insured with a check for $30,000 representing the policy limits on its uninsured motor vehicle coverage. Now, Mercury tries to recoup some or all of its uninsured payment from the tortfeasors—the vehicle owner and the driver’s successor insurer. The vehicle owner no longer claims to be permissibly uninsured but to be underinsured and thus not subject to a subrogation lawsuit by the injured party’s insurer to recover the $15,000 cash deposit it posted in lieu of insurance. CIGA, in turn, uses the vehicle owner’s underinsured status to deny it has any liability because the tortfeasor was underinsured rather than uninsured.
Because of the present language of the code and the majority’s conclusion this is an underinsured rather than uninsured claim, the vehicle owner and CIGA are able to shift the entire burden of their liability to the injured party’s insurance company. The statutory language, criticized by our colleagues in the Fourth District, requires an injured party to prove actual payment by the tortfeasors’ insurance companies before having any entitlement to the balance owed under his underinsured motorist coverage. That this statutory provision skewered the injured party’s insurance company in this case, rather than the injured party himself, is small consolation.