Court Opinion

ID: 9732371
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:18:13.022779+00
Date Added: 2024-06-11T18:26:26.767556
License: Public Domain

FRIEDMAN, J.
I concur, but with reluctance. My unwilling agreement results from the precedential force of Block v. Cal. Physicians Service (1966) 244 Cal.App.2d 266 [53 Cal.Rptr. 51], and West v. State Farm Mut. Auto. Ins. Co. (1973) 30 Cal.App.3d 562 [106 Cal.Rptr. 486], In composite, these two decisions represent a creeping erosion of the anti-subrogation principle established at common law and preserved by section 573, Probate Code. The successive amendments of State Farm’s “reimbursement” clauses illustrate how eagerly and quickly the disingenuous draftsmen of insurance policies move into the gaps created by decisional erosion.
Although' I respectfully suggest that the West decision was unrealistic, it is possible that State Farm’s draftsmanship goes beyond the limits *470staked out in that case. The West decision expressly abstained from considering the effect of a clause requiring the insured to bring suit against the third party. (30 Cal.App.3d at p. 565.) The present policy contains such a clause. The cumulative effect of the policy provisions is to create the economic reality of subrogation to the personal injury claim without its language.
The defendant insurance company argues that these clauses prevent double recovery. A liability insurance policy is a piece of merchandise. (See 7 Williston on Contracts, § 900, p. 34.) In a free society an individual may go out and buy and keep all the merchandise he desires. The question is not whether the policyholder is recovering from two sources but whether the insurance company is supplying the merchandise for which it exacted a premium. The double recovery argument is singularly unmoving.
The reimbursement provisions of the State Farm policy are tucked away in a “trust agreement” among the policy’s general conditions. These obscure subtractions seriously curtail the policy’s ostensible offer of medical payments coverage. Two additional principles of contract law—one, a rule of consent, the other a rule of interpretation—are aroused by these policy clauses. The first is the rule of constructive fraud, which may nullify the policyholder’s consent to fine-print “sleepers.” (1 Witkin, Summary of Cal. Law, Contracts, §§ 322-323.)
The other is the concept of contracts of adhesion, a doctrine particularly applicable when a public service firm of superior knowledge and insight sells standardized contracts to the general public. In those cases “the California courts have long been disinclined to effectuate clauses of limitation of liability which were unclear, unexpected, inconspicuous or unconscionable.” (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862, 879 [27 Cal.Rptr. 172, 377 P.2d 284].) “ ... [T]he courts in the field of insurance contracts have tended to require that the insurer render the basic insurance protection which it has held out to the insured.” (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263 , 280 [54 Cal.Rptr. 104, 419 P.2d 168].)
These two doctrines express closely related public policies. At some point they may combine to sire a new expression of public policy, one which denies enforcement of these artful withdrawals of coverage unless they are specifically brought to the customer’s attention before he buys the policy. The moral considerations underlying the adhesion concept *471transcend its limited role as a mere rule of contract interpretation. Public policy should assure the buyer an opportunity of shopping in the open market before he is sold a piece of merchandise falling short of his reasonable expectations.
Decisional law gives signs of progress to the point I have described. (See C. & J. Fert., Inc. v. Allied Mut. Ins. Co. (Iowa 1975) 227 N.W.2d 169; Corgatelli v. Globe Life & Accident Insurance Co. (1975) 96 Idaho 616 [533 P.2d 737]; see Keeton, Insurance Law Rights at Variance with Policy Provisions (1970) 83 Harv.L.Rev. 961.) Counsel have not briefed this line of inquiry. The pressures of a heavy workload- in this court discourage unsupported research and analysis.
I agree that the attorney fees should be borne proportionately.