Court Opinion

ID: 9751651
Source: CourtListenerOpinion
Date Created: 2023-08-28 16:44:02.988507+00
Date Added: 2024-06-11T07:26:54.325519
License: Public Domain

JOHNSON, J.
Although I concur in the judgment, I would base it on narrower grounds. Furthermore, I believe this case demonstrates how Insurance Code section 11580.2, subdivision (i) continues to operate as a trap for the unwary and a windfall for insurance companies. As I will explain below, this section is unnecessary to protect the subrogation rights of insurers and should be repealed.
I am not as certain as my colleagues that Ms. Kortmeyer’s claim under her insurance policy is not a “covered claim” within the meaning of Insurance Code section 1063.1. That section defines a “covered claim,” in relevant part, as one “imposed by law and within the coverage of an insurance policy of the insolvent insurer.” CIGA does not deny Ms. Kortmeyer had a valid contract with her insurer; the contract provided uninsured motorist coverage; and Ms. Kortmeyer suffered personal injuries when her car was struck in the rear by a “hit and run” driver. Thus it would seem Ms. Kortmeyer’s claim was “within the coverage of an insurance policy of the insolvent insurer.” The majority reasons because Insurance Code section 11580.2 is incorporated by law into every auto policy an uninsured motorist claim is only “within the coverage” of the policy if the insured has complied with section *129511580.2, subdivision (i). But section 11580.2, subdivision (i) does not speak in terms of coverage; it states “no cause of action shall accrue to the insured” under the policy unless the insured takes one of the specified actions within a year from the date of the accident. It seems to me a claim is either covered or not covered, i.e., it either comes within the definition of a risk insured against or it does not, and that is a very different question from whether the insured has a cause of action if the insurer breaches its duty to indemnify the insured for a covered risk. I recognize there is dicta in a few cases suggesting the insured’s uninsured motorist coverage lapses if the insured does not comply with the provisions of section 11580.2, subdivision (i). (See, e.g., West American Ins. Co. v. Chalk (1989) 213 Cal.App.3d 825, 828, 831 [261 Cal.Rptr. 837]; Firemen’s Ins. Co. v. Diskin (1967) 255 Cal.App.2d 502, 512 [63 Cal.Rptr. 177].) However, none of these cases, nor the majority’s opinion in this case, explains why this should be so.
But even assuming Ms. Kortmeyer has a “covered claim,” I agree with the majority her action was properly dismissed under Insurance Code section 11580.2, subdivision (i) because under Insurance Code section 1063.2, subdivision (b) CIGA “shall have the same rights as the insolvent insurer would have had if not in liquidation, including, but not limited to, the right to: (1). . . defend ... a claim in a court of competent jurisdiction . . . .” Because Coastal could have raised the bar of section 11580.2 in a suit by Ms. Kortmeyer, CIGA may raise that bar.
By enacting the CIGA legislation and mandating uninsured motorist protection the Legislature sought to protect the public from insolvent insurers and from uninsured motorists. Indeed, if there was ever an insured who deserved this protection it is Ms. Kortmeyer, who was injured by an uninsured motorist and had her insurance company go bankrupt in the space of a few months. Yet under the trial court’s ruling, which was clearly correct under the current state of the law, Ms. Kortmeyer was denied this protection.
It is time for the Legislature to take another look at Insurance Code section 11580.2, subdivision (i). While it is true this section was originally intended to protect the insurer’s subrogation rights under section 11580.2, subdivision (g), that protection is no longer necessary, if it ever was, in light of subsequent amendments to subdivision (g).
When Insurance Code section 11580.2 was originally enacted, “[t]he Legislature doubtless had in mind that delay in asserting an uninsured motorist claim can seriously prejudice the insurer. For example, the insurer’s subrogation right to go against the negligent third party . . . will be lost unless something is done within one year after the accident.” (Aetna Cas. & *1296Surety Co. v. Superior Court (1965) 233 Cal.App.2d 333, 340 [43 Cal.Rptr. 476].) Subsequently, however, the Legislature amended the subrogation provision of section 11580.2 to specifically allow the insurer to bring an action against the uninsured motorist “within three years from the date that payment was made hereunder.” (§ 11580.2, subd. (g).) This special statute of limitations takes precedence over the general one-year statute of limitations for personal injuries. (Code Civ. Proc., § 340, subd. (3); West American Ins. Co. v. Chalk, supra, 213 Cal.App.3d at p. 829), and conforms to the three-year statute of limitations for property damage. (Code Civ. Proc., § 338, subd. (c).) Furthermore, the three-year limitations period runs from the date “that payment was made” on the uninsured motorist claim, not from the date of the injury. Therefore the insured’s failure to settle, arbitrate or sue the uninsured motorist within one year in no way prejudices the insurer’s subrogation rights.
Furthermore, as one commentator predicted when Insurance Code section 11580.2 was enacted, a requirement such as section 11580.2, subdivision (i) could be used as a sword by insurance companies against their own insureds rather than as a shield against the loss of their subrogation rights. (Comment, Uninsured Motorist Insurance: California’s Latest Answer to the Problem of the Financially Irresponsible Motorist (1960) 48 Cal.L.Rev. 516, 531.) “Since often the insured will not think it necessary to bring an action against the uninsured motorist because of the existence of uninsured motorist coverage, it would not be fair to allow an insurer to take refuge in the [one-year] statute of limitations after the insured has been lulled into a false sense of security by reason of the coverage itself.” Case law confirms this prediction. (See, e.g., cases collected in Branham v. State Farm Mut. Auto. Ins. Co. (1975) 48 Cal.App.3d 27, 30 [121 Cal.Rptr. 304].) In 1969, the Legislature added subdivision (k) to section 11580.2, requiring an insurance company to notify an insured who has made an uninsured motorist claim of the provisions of subdivision (i) at least 30 days before the expiration of the one-year time limit. Failure to give that notice tolls the time period in section 11580.2, subdivision (i) until 30 days after notice is given. This provision does not apply to insureds such as Ms. Kortmeyer who are represented by counsel, apparently on the theory attorneys would know enough to comply with the provisions of section 11580.2, subdivision (i). As this case demonstrates, that theory was mistaken. The requirements of subdivision (i) now serve principally as a sword cutting off the rights of an insured to the uninsured motorist protection she paid for.
One court has suggested the purpose of Insurance Code section 11580.2, subdivision (i) is to even-out the financial responsibility of the insurer and the uninsured motorist. Otherwise, the court stated, the uninsured motorist *1297would escape liability if the insured did not file suit within one year from the date of the accident (Code Civ. Proc., § 340, subd. (3), while the insurer, who is only derivatively liable, could be sued under the policy within four years. (Code Civ. Proc., § 337.) (State Farm Mut. Auto. Ins. Co. v. Patton (1987) 194 Cal.App.3d 626, 631 [239 Cal.Rptr. 750].) The court failed to note the provision of section 11580.2, subdivision (g), discussed ante, which allows the insurer to sue the uninsured motorist within three years from the date it pays its insured under her uninsured motorist coverage. Under that provision the uninsured motorist cannot escape liability merely because the insured did not file suit within one year from the date of the accident.
The first maxim of California jurisprudence is that “When the reason for a rule ceases, so should the rule itself.” (Civ. Code, § 3510.) Insurance Code section 11580.2, subdivision (i) has long outlived its usefulness and should be repealed.