Lumberman's Mutual Casualty Co. v. Wyman

Citations: 64 Cal. App. 3d 252; 134 Cal. Rptr. 318; 1976 Cal. App. LEXIS 2067Docket: Civ. 38390

Court: California Court of Appeal; November 29, 1976; California; State Appellate Court

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John Wyman appeals a judgment declaring that Lumberman's Mutual Casualty Company is not liable for uninsured motorist benefits under an automobile liability policy issued to his father. The policy was active when Wyman, a pedestrian, was struck by a motorcycle while aiding others involved in an accident. Wyman initially sued the motorcycle driver, Robert Douglas, and two others but dismissed Douglas without the insurer's consent after determining he lacked insurance. Following a trial against Ellen Wright, Wyman lost and sought to claim uninsured motorist benefits, which the insurer contested. The court found Wyman breached the policy by dismissing defendants and proceeding to judgment without the insurer's consent. Wyman argues the policy only prohibits settlements without consent, and claims the insurer cannot invoke an "unconsented judgment" exclusion not explicitly included in the policy. The relevant Insurance Code mandates that all automobile liability policies in California include uninsured motorist coverage unless waived in writing. Additionally, the law allows certain exclusions from this coverage, including those outlined in subdivision (c) of section 11580.2, which details specific circumstances under which coverage does not apply.

Bodily injury coverage for the insured is limited under specific conditions: 1) The insured cannot settle or litigate against a potentially liable party without the insurer's written consent, which could exempt the insurer from liability. 2) Coverage does not extend to situations that would benefit workers' compensation carriers or governmental entities. 3) Proof of financial responsibility is required as per the Vehicle Code. 4) Coverage is excluded for bodily injuries sustained by the insured while occupying a motor vehicle owned by an insured unless it is an insured vehicle. 5) The same exclusion applies if the insured is struck by a vehicle owned by an insured. The court in Mills v. Farmers Ins. Exchange noted that the 1959 statute provides a complete exemption for insurers if the insured settles or obtains a judgment without consent, indicating a purpose to protect the insurer's subrogation rights. The respondent insurer's policy includes exclusions that align with statutory requirements but lacks explicit reference to the unconsented judgment exclusion. The insurer argues that such statutory language is implied in the contract, while the appellant contends that the policy's language signifies an intention to omit this exclusion. Ultimately, the parties' rights are determined by the policy terms, which must meet or exceed the Uninsured Motorist Act's requirements.

The court, referencing multiple precedential cases, establishes that an insurer can offer uninsured motorist coverage that exceeds statutory requirements. In Civil Service Employees Ins. Co. v. Ricard, the respondent asserts that statutory language is clear and singular in meaning, yet the court notes that Ricard does not detail the relevant insurance policy provisions. It emphasizes that Kowalski's interpretation relied heavily on the statute due to the policy's incorporation of the statutory language. The court clarifies that while section 11580.2 mandates minimum uninsured motorist coverage, it does not restrict policies to only that minimum, allowing for additional coverage terms.

The court further outlines rules for interpreting insurance policies, stating ambiguities must be resolved against insurers and that exclusion clauses must be clear and conspicuous. It confirms that an insurer can limit coverage as long as it adheres to legal standards and public policy. In this case, the policy language concerning unconsented settlements does not imply a consent condition for obtaining judgments, which is permissible under the Insurance Code. Consequently, any ambiguity in the policy must favor the insured, and without a specific prohibition on pursuing judgment without the insurer's written consent, the insurer cannot invoke statutory defenses. The judgment in question is reversed.