Akkerman v. Grange Ins. Assoc.

[5] 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA [8] 9 ANGELA AKKERMAN, No. 2:20-cv-01379-JAM-DMC 10 Plaintiff, 11 v. ORDER DENYING DEFENDANT GRANGE INSURANCE ASSOCIATION’S MOTION 12 GRANGE INSURANCE ASSOCIATION FOR PARTIAL SUMMARY JUDGMENT and DOES 1-10, [13] Defendants. [14] 15 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND1 16 Plaintiff Angela Akkerman (“Akkerman”) was working as a 17 rural postal carrier for the U.S. Postal Service on February 8, 18 2017, when the vehicle she was driving was struck head on by 19 Donald Knox. Pl.’s Resp. to Def.’s Statement of Undisputed 20 Material Facts (“Def.’s SUMF”) ¶ 2, ECF No. 13. Title to the 21 vehicle driven by Knox was registered to Knox’s son-in-law, 22 Darrin Day. Id. ¶ 4. Neither Knox nor Day had insurance. Id. 23 ¶¶ 3, 4. Akkerman, however, had personal automobile insurance 24 issued by Defendant Grange Insurance Association (“Grange”). Id. 25 ¶ 1. [26] 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for January 26, 2021. 1 Akkerman suffered significant injuries as a result of the 2 accident. Id. ¶ 5. The US Department of Labor, Federal 3 Employees Compensation paid Akkerman $77,201.06 for medical 4 expenses and $15,877.52 in disability payments for a total of 5 $93,078.58. Id. ¶ 6. Akkerman then submitted a claim to Grange 6 on April 25, 2018, requesting the policy limit of $100,000 under 7 the Uninsured Motorist provisions of the policy. Id. ¶ 7. On 8 June 4, 2018, Grange tendered $6,921.42 to Akkerman after 9 asserting an offset of $93,078.58 for the Workers’ Compensation 10 payments she received. Id. ¶ 9. Akkerman, contending this 11 offset was improper under the terms of the policy, brought this 12 action for (1) breach of contract; and (2) breach of the covenant 13 of good faith and fair dealing in the Siskiyou County Superior 14 Court. Compl., ECF No. 1-1. Grange removed the action to this 15 Court on diversity grounds. Notice of Removal, ECF No. 1. 16 Grange now moves for partial summary judgment on the breach of 17 contract claim arguing that by law it was entitled to offset the 18 workers’ compensation from the policy limit. Def.’s Mot. for 19 Partial Summ. J. at 1, ECF No. 9. For the reasons set forth 20 below the Court DENIES Defendant’s Motion for Partial Summary 21 Judgment. 22 II. OPINION 23 A. Requests for Judicial Notice 24 Both parties have requested the Court take judicial notice 25 of Plaintiff’s complaint filed in the Siskiyou County Superior 26 Court. See Def.’s Req. for Judicial Notice, ECF No. 10; Pl.’s 27 Req. for Judicial Notice, ECF No. 11. As a matter of public 28 record, the Court finds the complaint is a proper subject of 1 judicial notice. See Harris v. Cty. of Orange, 682 F.3d 1126 , 2 1132 (9th Cir. 2012). 3 Accordingly, the Court GRANTS Plaintiff’s and Defendant’s 4 Requests for Judicial Notice. In doing so the Court takes 5 judicial notice only of the existence of the document and 6 allegations made, not the truth of the facts recited therein. 7 See Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 8 2001). 9 B. Legal Standard 10 A Court must grant a party’s motion for summary judgment 11 “if the movant shows that there is no genuine dispute as to any 12 material fact and the movant is entitled to a judgment as a 13 matter of law.” Fed. R. Civ. P. 56(a). The movant bears the 14 initial burden of “informing the district court of the basis for 15 its motion and identifying [the documents] which it believes 16 demonstrate the absence of a genuine issue of a material fact.” 17 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is 18 material if it “might affect the outcome of the suit under the 19 governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242 , 20 248 (1986). Once the movant makes this initial showing, the 21 burden rests upon the nonmoving party to “set forth specific 22 facts showing that there is a genuine issue for trial.” Id. An 23 issue of fact is genuine if “the evidence is such that a 24 reasonable jury could return a verdict for the nonmoving party.” [25] Id. 26 C. Analysis 27 Defendant moves for partial summary judgment on Plaintiff’s 28 breach of contract claim arguing it was legally entitled to 1 offset the workers’ compensation from its policy limits, thus 2 there was no breach of contract. Def.’s Mot. at 9. California 3 Insurance Code section 11580.2 mandates that every automobile 4 insurance contract contain a provision providing coverage for 5 the insured against injury by an uninsured motorist. McGreehan 6 v. California State Auto. Ass., 235 Cal.App.3d 997, 1001 . 7 Section 11580.2 also authorizes insurers to include certain 8 offsets within their policies. Relevant here is subdivision (h) 9 which states that “[a]ny loss payable under the terms of the 10 uninsured motorist endorsement or coverage to or for any person 11 may be reduced [. . .] [b]y the amount paid and the present 12 value of all amounts payable to him [. . .] under any workers’ 13 compensation law.” Cal. Ins. Code § 11580.2 (h)(1). As used in 14 the Insurance Code, the word “shall” is mandatory and the word 15 “may” is permissive. Id. § 16. Section 11580.2(h) thus gives 16 the parties to an insurance policy the right to contract for the 17 reduction of policy benefits by the amount of workers’ 18 compensation benefits received by the insured, but it does not 19 confer the right to a deduction absent a specific provision in 20 the policy. Waggaman v. Northwestern Security Ins. Co., 16 21 Cal.App.3d 571 , 579 (Ct. App. 1971) (“By permitting the parties 22 to an uninsured motorist insurance policy to contract for a 23 reduction of the loss payable by the amount paid [. . .] under 24 any workmen’s compensation law [. . .]”). 25 Defendant argues that regardless of what was stated in the 26 policy, it was entitled to offset the workers’ compensation as 27 allowed by section 11580.2 as those provisions “are deemed part 28 of every auto policy issued in California” and “in the event 1 that the terms of a written policy conflict with the statute, 2 the statute prevails over the policy terms.” Def.’s Mot. at 11. 3 This characterization over states California law and California 4 courts have repeatedly rejected this argument. As the court in 5 Luberman’s Mutual Casualty Co. v. Wyman explained, section 6 11580.2 sets the floor that insurers must provide regarding 7 uninsured motorist coverage, not a ceiling. 64 Cal.App.3d 252 , 8 257 (Ct. App. 1976). Accordingly, the rights of the parties are 9 to be determined by the terms of their policy, provided such 10 policy grants benefits equal to or greater than is required by 11 the act. Id. Under California law, every insurance policy will 12 thus be read so as to provide the minimum coverage required by 13 law even if the policy fails to do so. Utah Prop. & Cas. Ins. 14 Etc. Ass’n. v. United Servs. Auto. Ass’n., 230 Cal.App.3d 1010 , 15 1018 (Ct. App. 1991). However, when section “11580.2’s coverage 16 provisions are less favorable to an insured than those which the 17 insurer chose to write into its policy, the statutory provisions 18 may not be read into the policy to the insured’s detriment.” 19 Id. Subdivision (h) defines one type of exclusion that is 20 permissible under the statute. Id. at 1017. But unless Grange 21 “has incorporated such exclusion[] expressly and plainly into 22 its policy [. . .] it may not invoke [it] to limit coverage to” 23 Plaintiff. Id. 24 Thus, the issue is whether Defendant’s offset was proper 25 under the terms of its policy. The policy’s Uninsured Motorists 26 Coverage provision states: “[w]e will not pay for any element of 27 loss if a person is entitled to receive payment for the same 28 element of loss under any workers’ compensation law exclusive of 1 non-occupational disability benefits.” Def.’s SUMF ¶ 1. In 2 California when interpreting an insurance contract, the primary 3 object is to ascertain and carry out the intention of the 4 parties. Jarrett v. Allstate Ins. Co., 209 Cal.App.2d 804 , 809 5 (Ct. App. 1962). And the standard to be used is the 6 understanding of the ordinary person. Id. If any ambiguity or 7 uncertainty exists an insurance policy is construed strictly 8 against the insurer and most liberally in favor of the insured. [9] Id. The rule of strict construction against the insurer is 10 particularly applicable where the policy provides for exceptions 11 to or exclusions from the general import of the principal 12 coverage clauses. Id. at 809-10 . The burden rests on the 13 insurer to phrase such exceptions and exclusions in clear and 14 unmistakable language. Id. at 810 . However, when the terms of 15 the policy are plain and explicit the courts have no alternative 16 but to give effect to the contract of insurance as executed by 17 the parties. Id. 18 Defendant relies on Rangel v. Interinsurance Exchange, 4 19 Cal.4th 1 (1992), McGreehan v. California State Automobile 20 Ass’n, 235 Cal.App.3d 997 (Ct. App. 1999), and Jarrett v. 21 Allstate Ins. Co., 209 Cal.App.2d 804 (1962), to support its 22 position that under the terms of the policy it was entitled to 23 subtract what Plaintiff received from workers’ compensation from 24 the $100,000 policy limit. As described below, Defendant’s 25 reliance is misplaced. 26 Jarrett involved an insurance policy which stated that “any 27 loss payable to any person under the terms of this Section II 28 shall be reduced by the amount paid under any workmen’s 1 compensation law.” 209 Cal.App.2d at 808 . The plaintiff argued 2 that under the terms of the policy the workers’ compensation was 3 to be subtracted from his total damages. Id. at 808 . The 4 court, however, disagreed, finding that the insurer properly 5 subtracted the workers’ compensation from the policy limits. [6] Id. at 812 . In so holding, the court noted there was no 7 ambiguity and that the provision clearly referenced the loss 8 payable to the insured under the policy and not the loss which 9 he suffered at the hands of the uninsured motorist. Id. at 811 . 10 The court reasoned that an ordinary person would understand that 11 the loss referenced to was not the amount of actual damages 12 caused by the accident, but the amount of such damages which 13 were to be paid under the terms of the policy. Id. at 812 . 14 Accordingly, the court found it was proper for the insurer to 15 pay the insured only the difference between the policy limit and 16 the amount received from workers’ compensation. Id. 17 Relying on Jarrett, Defendant argues it was entitled to 18 offset the $93,078.58 Akkerman received from workers’ 19 compensation from the $100,000 policy limit, owing her only 20 $6,921.42. Def.’s Mot. at 17. The problem for Defendant, 21 however, is that the language of the policy at issue here is 22 unlike those at issue in Jarrett, McGreehan, or Rangel. In 23 Jarrett, the policy stated that “any loss payable to any person 24 under the terms of this Section II shall be reduced by the 25 amount paid under any workmen’s compensation law.” Jarrett, 209 26 Cal.App.2d at 807 (emphasis added). And in Rangel the relevant 27 provision stated: “any loss payable to or for any person shall 28 be reduced by the amount paid and the present value of all 1 amounts payable to such person under any worker’s [. . .] 2 compensation” 4 Cal.4th at 5 (emphasis added), which the 3 California Supreme Court noted was “nearly identical” to section 4 11580.2(h). Id. at 17. 5 Similarly, in McGreehan the policy stated that “any amount 6 payable may be reduced by any payment or amount payable because 7 of the bodily injury under any workers’ compensation law.” 235 8 Cal.App.3d at 1000 (emphasis added). The court found that the 9 term “any amounts payable” used in the policy was virtually 10 interchangeable with the term “any loss payable” used in the 11 policy in Jarrett and both were synonymous with “liability”. 12 Id. at 1004. Accordingly, the court found the parties had 13 clearly agreed that any workers’ compensation would be 14 subtracted from the policy limit. Id. at 1005. 15 Here unlike the policy at issue in the cases cited by 16 Defendant, the policy states in the Uninsured Motorist 17 provision: “[w]e will not pay for any element of loss if a 18 person is entitled to receive payment for the same element of 19 loss under any workers’ compensation law.” Def.’s SUMF ¶ 1 20 (emphasis added). Defendant argues that this “element of loss” 21 language “differs only slightly, stylistically, from the 22 statute” and policies at issue in Jarrett, McGreehan and Rangel. 23 Def.’s Mot. at 13. The Court disagrees. 24 As the court in Jarrett noted the term “any loss payable” 25 unambiguously refers to the amount payable by the insurance 26 company up to the policy limit, not the total amount of damages 27 incurred, as the amount “payable” by the insurer would never be 28 more than the policy limit. 209 Cal.App.2d at 812 . 1 Contrastingly, while “element of loss” is not defined in the 2 policy, in ordinary usage “element” is defined as “one of a 3 number of distinct or disparate units.” Webster’s Third New 4 International Dictionary 734 (2002). This “element of loss” 5 language indicates that the total loss is to be divided into 6 parts, which could include medical costs, lost wages, disability 7 payments and pain and suffering. If any of these elements were 8 covered by workers compensation, then Defendant could subtract 9 the workers’ compensation amount from the policy limit for that 10 element. However, if any elements of loss were not covered then 11 Defendant, under the policy, would be required to pay the full 12 amount for that element (or elements) up to the policy limit. 13 While it appears the California courts have not interpreted such 14 an “element of loss” provision, this reading is consistent with 15 other jurisdictions that have. See e.g. Nat’l Ins. Ass’n v. 16 Sockwell, 828 So. 2d 111, 132 (Ala. 2002) (“National’s adjuster 17 never even attempted to discern which of those elements of loss 18 were not covered under Alabama workers’ compensation law and, 19 thus, which of those elements would be compensable under the 20 National policy”); Greenfield v. Cincinnati Ins. Co., 737 N.W. 21 2d 112, 119 (Iowa 2007) (finding that the “elements of loss” 22 language suggests the need to break down the loss or recovery 23 awarded by the jury into “elements of loss” and then analyze 24 each “element of loss” separately to determine whether the 25 recovery for the “element” is duplicative or amounts to “the 26 same element of loss” recovered under workers’ compensation); 27 St. Paul Fire & Marine Ins. Co. v. Emp’rs Ins. Co. of Nev., 146 28 P.3d 258 , 263 (Nev. 2006) (finding “the elements of loss” eee mE IE ROS NRE III EIDE IIE IE III EN III REE IE OSCE I EE eee 1 | provision simply limits the coverage available to an injured 2 employee to elements of loss not already covered by the workers’ 3 compensation) ?. 4 Accordingly, under the terms of the policy it was not 5 proper for Defendant to subtract the amount Akkerman received 6 from workers’ compensation from the policy limit without 7 analyzing the elements of loss. Akkerman alleges that she 8 received workers’ compensation for medical bills and disability 9 | but has additional elements of loss not covered. If Akkerman 10 proves she has additional elements of loss not covered by 11 workers’ compensation, Defendant under the policy is required to 12 pay those different elements up to the policy limit. For these 13 reasons Defendant’s Motion for Partial Summary Judgment is 14 DENIED. 15 IIl. ORDER 16 For the reasons set forth above, the Court DENIES 17 Defendant’s Motion: 18 IT IS SO ORDERED. 19 Dated: March 12, 2021 20 □□ 21 HN A. MENDEZ, UNITED STATES DISTRICT [24] 2 Defendant argues that it is improper to apply out of state 29 authority to analyze a California statute. Def.’s Reply at 2, 26 | ECF No. 17. However, the Court here is not analyzing a California statute but a contract provision. To the extent these 27 cases interpret a similar clause, they are not binding but persuasive authority. See Aydin Corp. v. First State Ins. Co., 18 28 | Cal.4th 1183, 1190 (1998).