Court Opinion

ID: 2683847
Source: CourtListenerOpinion
Date Created: 2014-07-15 21:01:24.164332+00
Date Added: 2024-06-11T13:13:40.040539
License: Public Domain

Filed 7/15/14 Ortiz v. State Farm Mut. Auto. Ins. Co. CA5

                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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.

           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                     FIFTH APPELLATE DISTRICT

NICHOLAS ORTIZ,
                                                                                           F067121
         Plaintiff and Appellant,
                                                                           (Super. Ct. No. 11CECG01936)
                   v.

STATE FARM MUTUAL AUTOMOBILE                                                             OPINION
INSURANCE COMPANY,

         Defendant and Respondent.

                                                   THE COURT*
         APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y.
Hamilton, Judge.
         Perez, Williams, Medina & Rodriguez and Eric V. Grijalva for Plaintiff and
Appellant.
         McCormick, Barstow, Sheppard, Wayte & Carruth, Todd W. Baxter and Dana B.
Denno for Defendant and Respondent.
                                                        -ooOoo-

*        Before Levy, Acting P.J., Cornell, J. and Poochigian, J.
       This appeal arises from a dispute regarding insurance coverage following a motor
vehicle accident. Appellant Nicholas Ortiz filed a complaint for declaratory relief
claiming that he was entitled to underinsured motorist benefits under a policy issued by
respondent, State Farm Mutual Automobile Insurance Company (State Farm), to
appellant’s employer. The trial court disagreed and granted summary judgment in favor
of State Farm. The trial court concluded that the workers’ compensation benefits
appellant received offset the underinsured motorist benefits available to appellant under
the State Farm policy. We will affirm the judgment.
                                     BACKGROUND
       Appellant was injured while in the course and scope of his employment when a
vehicle driven by Choi Seok Hwan collided with appellant’s vehicle. Hwan’s insurance
policy had an available per person limit of $15,000 and appellant settled his liability
claim for that amount. Appellant also received approximately $107,000 in workers’
compensation benefits.
       Appellant made a claim for underinsured motorist benefits under the State Farm
policy. This policy has underinsured motorist limits of $100,000.
       State Farm denied appellant’s claim based on the following offset in the policy’s
underinsured motorist coverage:

            “Any amount payable under this coverage shall be reduced by any
       amount paid or payable to or for the insured:

              “a.    for bodily injury under the liability coverage; or

              “b.    under any workers’ compensation, disability benefits, or
       similar law.”
       Appellant filed the underlying complaint for declaratory relief claiming that, when
compared to the statutory requirements, this offset provision is overly broad and therefore
is void. The trial court disagreed. The trial court concluded that the policy was to be
read and enforced as if it did comply with the law and that the $107,000 appellant

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received in workers’ compensation benefits reduced the available underinsured motorist
benefits to “$0.” Accordingly, the trial court granted State Farm’s motion for summary
judgment.
                                      DISCUSSION
       Insurance Code1 section 11580.2, subdivision (h), provides that

        “[a]ny loss payable under the terms of the uninsured motorist endorsement
       or coverage to or for any person may be reduced:

              “(1) By the amount paid … under any workers’ compensation law,
       exclusive of nonoccupational disability benefits.”
Although this setoff provision specifically applies to uninsured motorist coverage, it
permits such a setoff against underinsured motorist coverage as well. (Rudd v. California
Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 953-954.)
       Appellant acknowledges that he received workers’ compensation benefits and that
an insurer is permitted to offset such benefits against underinsured motorist coverage.
Appellant’s argument is based on the provision in the State Farm policy that permits an
offset against “disability benefits” without excluding “nonoccupational disability
benefits” as required by section 11580.2, subdivision (h)(1). According to appellant,
providing for a setoff against “disability benefits” is overbroad and violates public policy.
Therefore, appellant argues, the entire provision is void.
       However, appellant received workers’ compensation benefits, not
“nonoccupational disability” benefits. State Farm was statutorily authorized to offset
these workers’ compensation benefits against the underinsured motorist coverage. By
authorizing such a reduction, the Legislature intended to prevent the insured from
recovering twice for the same injury. (Rangel v. Interinsurance Exchange (1992) 4
Cal.4th 1, 8.) “[T]he Legislature’s purpose in enacting section 11580.2 was to ‘shift the

1      All further statutory references are to the Insurance Code.

                                             3.
cost of an industrial injury sustained by an employee, as the result of the negligence of an
uninsured motorist, from the motoring public (who pay the premium for uninsured
motorist coverage) to the employer or workmen’s compensation carrier.’” (Ibid.) Thus,
as applied to appellant, the offset provision in the State Farm policy promotes public
policy.
          Moreover, there is no requirement that a policy strictly adhere to the statutory
language. (McGreehan v. California State Auto. Assn. (1991) 235 Cal.App.3d 997,
1004.) Rather, the provisions of section 11580.2 are a part of every insurance policy to
which they are applicable. (Hartford Fire Ins. Co. v. Macri (1992) 4 Cal.4th 318, 324.)
These provisions are read into the policy and become a part of it. (Craft v. State Farm
Mut. Auto. Ins. Co. (1993) 14 Cal.App.4th 1284, 1292.) Accordingly, the State Farm
policy’s reference to “disability benefits” does not void the entire provision as a violation
against public policy.
                                        DISPOSITION
          The judgment is affirmed. Costs on appeal are awarded to respondent State Farm.

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