Opinion
NOT TO BE PUBLISHED
Marin County Super. Ct. No. CV 072244
Jenkins, J.
Introduction
In a prior appeal in this case, we affirmed summary judgment in favor of plaintiff State Farm Mutual Automobile Insurance Company (State Farm) in its declaratory action against Susan Ranft and her minor children (the Ranfts). (See State Farm Mutual Automobile Insurance Co. v. Ranft (Jan. 30, 2009, A120881) (Ranft).) In this appeal, California’s Department of Transportation (appellant) challenges the declaratory judgment against it and in favor of State Farm arising from the same facts and relating to the same insurance policies at issue in Ranft.
We incorporate Ranft by reference.
Background
“In August 2003, State Farm issued automobile insurance policy number G16 4188-E02-05E (auto policy) to Susan Ranft and her husband, Joseph Ranft, covering their 2004 Honda Element. State Farm also issued a personal liability umbrella policy number 05-NA-0883-8 (umbrella policy) to Susan and Joseph Ranft. Both policies were in effect on August 16, 2005. [¶] On August 16, 2005, Joseph Ranft was traveling in Mendocino County on State Route 1 as a passenger in his Honda Element driven by Elegbra Earl. Both Joseph Ranft and Elegbra Earl were killed when the vehicle went off the road and plunged into the water below. On January 19, 2007, the Ranfts filed a wrongful death action seeking damages against the [Department of Transportation], the estate of Elegbra Earl and Kathleen Rzeplinski, the driver of another vehicle involved in the accident. The complaint in the wrongful death action alleged the [Department of Transportation] was responsible for creating and maintaining a defective and dangerous condition at the location of the accident. The complaint also alleged that the negligence of Earl and Rzeplinski caused the accident. [¶] On May 11, 2007, State Farm sued the Ranfts seeking a declaratory judgment that it had no duty to defend or indemnify the Estate of Elegbra Earl (“Earl”) in the Ranfts’ wrongful death action as a result of applicable exclusion clauses in Ranfts’ State Farm insurance policies.” (Ranft, supra, at pp. *1-2.)
On November 13, 2007, State Farm filed a “Doe” amendment adding appellant as a named defendant in its declaratory action. In January 2008, State Farm filed a motion for summary judgment against the Ranfts, Earl and appellant. In February 2008, the trial court granted summary judgment in favor of State Farm against the Ranfts and Earl. The trial court ruled that State Farm’s motion for summary judgment was invalid as to appellant because it was served before appellant made a general appearance.
In March 2008, while the Ranfts’ appeal to this court was pending, State Farm filed a second motion for summary judgment against appellant. On June 11, 2008, the trial court issued its order granting summary judgment in favor of State Farm on its complaint for declaratory relief against appellant. Notice of Entry of Judgment was filed on July 23, 2008. Appellant filed a timely notice of appeal on September 9, 2008.
Discussion
In Ranft, we concluded that the Ranfts’ State Farm automobile insurance policies excluded coverage to Earl for claims against him by the Ranfts based on bodily injuries to Joseph Ranft that resulted in his death. (Ranft, supra, at *p. 5.) On two grounds, appellant urges that we reach a contrary conclusion here. First, appellant contends that State Farm must provide Earl with liability coverage because he is a permissive driver who cannot, on public policy and equal protection grounds, be excluded under the State Farm policies. Second, appellant argues the State Farm policies must provide Earl complete indemnification because the exclusion fails to expressly or conspicuously exclude coverage for third party indemnification.
A. Public Policy and Equal Protection
Insurance Code section 11580.1 subdivision (b) sets forth the provisions that must be included in any automobile liability insurance issued in the State of California. In this respect, every policy of automobile liability insurance must include a provision “affording insurance to the named insured with respect to any owned or leased motor vehicle covered by the policy, and to the same extent that insurance is afforded to the named insured, to any other person using the motor vehicle, provided the use is by the named insured or with his or her permission, express or implied, and within the scope of that permission.” (§ 11580.1, subd. (b)(4).)
Further statutory references are to the Insurance Code unless otherwise noted.
Section 11580.1, subdivision (c), on the other hand, permits “the insurance afforded by any policy of automobile liability insurance” to be issued subject to certain exclusions specified therein, including “[l]iability for bodily injury to an insured or liability for bodily injury to an insured whenever the ultimate benefits of that indemnification accrue directly or indirectly to an insured.” (§ 11580.1, subd. (c)(5).)
Appellant contends that by excluding liability coverage to a permissive driver for injuries to an insured, the State Farm policies violate the overarching public policy of providing coverage to permissive users as mandated by the legislature and the courts. In this regard, appellant correctly notes that Insurance Code section 11580.1, subdivision (b)(4) requires all automobile policies to provide coverage to permissive drivers. According to appellant, however, the coverage required by section 11580.1, subdivision (b)(4) means that the exclusion permitted under subdivision (c)(5) must be negated when liability for injuries to an insured attaches to a permissive driver. Appellant asserts that its articulation of public policy and statutory interpretation finds support in Ohio Farmers Ins. Co. v. Quin (1988) 198 Cal.App.3d 1338 (Quin) and Cooper v. Bray (1978) 21 Cal.3d 841. We disagree.
Based on a plain reading of the statutes, we reject appellant’s contention that section 11580.1, subdivision (c)(5) must be read as inapplicable to permissive drivers in order to give effect to the public policy concerns enshrined in subdivision (b)(4). Subdivision (b)(4) requires that an automobile insurance policy afford insurance to a permissive user “to the same extent” that it affords insurance “to the named insured.” Here, under the State Farm policies, the permissive user, Earl, is entitled to exactly the same coverage as that afforded to any other insured under the policies. If, for example, Earl had been sued for damages by the driver of the other car involved in the accident, or by any other stranger to the State Farm insurance policies for that matter, he would have been entitled to the full coverage provided by those policies. Thus, the exclusionary provisions in the policies authorized under subdivision (c)(5) of section 11580.1 in no way conflict with, or diminish, the coverage provisions for the benefit of permissive drivers required under subdivision (b)(4).
Also, appellant’s argument finds no support in the case law it relies upon. The appellate court in Quin addressed an issue arising under the 1982 version of section 11580.1, subdivision (d)(1), which permitted a policy to exclude coverage for the “use” of an insured vehicle by a person designated by name in the policy. (Quin, supra, 198 Cal.App.3d at p. 1344.) The insured vehicle owner’s son Martin was designated by name as excluded under the policy, as permitted by subdivision (d)(1). Martin entrusted the vehicle to his friend Sylvia, who injured a cyclist while driving the vehicle. The cyclist filed a complaint for damages against Sylvia, Martin and the owner. The insurer sought to invoke the exclusion and deny liability coverage on the grounds that Martin’s “use” of the vehicle included his “entrustment” of the vehicle to Sylvia. (Quin, supra, 198 Cal.App.3d at p. 1341.)
On appeal, the court rejected the insurer’s attempt to expand Martin’s exclusion to include an undesignated permissive driver to whom he entrusted the vehicle, and held that the term “use” under subdivision (d)(1) did not encompass “entrustment.” (Quin, supra, 198 Cal.App.3d at p. 1344.) The court reasoned in part that to interpret “use” to encompass “entrustment” would violate the public policy of the state requiring coverage of permissive users. (Id. at pp. 1347-1348.) Quin is wholly inapposite to the State Farm policies in this case.
Unlike the insurer in Quin, State Farm is not trying to expand an exclusionary provision in the policy to preclude coverage to an entire class of undesignated permissive users. In fact, the exclusions at issue here do not target permissive users at all: rather, the exclusions preclude liability coverage for damages arising from bodily injury or death to anyone insured under the policies, irrespective of who is driving the vehicle when the injuries arose. Viewed in this light, none of the public policy concerns expressed in the Quin case are present in this case. State Farm is not attempting to deny coverage to Earl. There is no question that if Earl had injured a bicyclist, as the permissive driver did in Quin, then State Farm would have been obligated to defend and indemnify Earl in a suit by the cyclist to recover damages for his or her personal injury. Thus, our construction of subdivision (c)(5) does not offend the public policy stated in Quin that “every automobile liability policy, as a matter of law, must cover permissive users.” (Quin, 198 Cal.App.3d at p. 1344.) Earl was covered, and had the same coverage under the policy as any other insured, in compliance with the public policy of “giving ‘monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injury through the negligent use of those highways by others.’ (Citation.)” (Id. at p. 1347.)
In further support of its public policy argument, appellant relies on Cooper v. Bray, supra, which is not an automobile insurance case and is wholly inapposite here. It concerns a constitutional challenge to section 17158 of the Vehicle Code, which barred an automobile owner from suing a permissive driver for injuries sustained while riding as a passenger in the vehicle unless the injuries resulted from the permissive driver’s intoxication or willful misconduct. (Cooper v. Bray, supra, 21 Cal.3d at pp. 846-847.) The California Supreme Court held that section 17158 of the Vehicle Code violated principles of equal protection because the disparate treatment accorded owner-passengers, as opposed to non owner-passengers, bore no rational relation to a realistically conceivable legislative purpose. (Id. at pp. 852-853.) Here, of course, there are no such equal protection concerns. The owner-passenger, Joseph Ranft, unlike the owner-passenger in Quin, was free to file, and his family did file, a negligence action against the permissive driver Earl for bodily injuries resulting in his death. Thus, Cooper v. Bray provides no support for appellant’s argument that the exclusion permitted by subdivision (c)(5) violates public policy.
Appellant also argues that because the public policy requiring “coverage to permissive drivers overrides” the exclusion permitted under subsection (c)(5), subsection (c)(5) should be read to allow denial of coverage only in “interfamilial lawsuits.” Appellant suggests that a failure to narrowly construe subsection (c)(5) in this manner violates equal protection. On this point, appellant relies principally on Farmers Ins. Exchange v. Cocking (1981) 29 Cal.3d 383 (Cocking).) We do not read Cocking so narrowly.
In Cocking, the California Supreme Court addressed challenges to section 11580.1 on both public policy and equal protection grounds. The court noted that section 11580.1 “authorizes automobile liability insurers to exclude from coverage an insured’s bodily injury liability to any other person insured under the policy.” (Cocking, supra, 29 Cal.3d at p. 386, italics added.) The court stated that “the exclusion is expressly sanctioned by state statute and, accordingly, cannot be struck down on public policy grounds.” (Id. at p. 387.) As we specifically noted in Ranft, “[a]ny suggestion that the exclusion clauses at issue violate public policy is without merit. It is well settled that policy exclusions for injury to insureds do not violate public policy because they are explicitly sanctioned under Section 11580.1, subdivision (c) of the Insurance Code,... which “ ‘itself constitutes and expresses’ ” [public] policy.” (Ranft, supra, at p. *4, fn. 3, citing Cocking, supra, 29 Cal.3d at p. 388.) To reiterate, Cocking stated that section 11580.1 authorizes policy exclusions for “bodily injury liability to any other person insuredunder the policy” (Cocking, supra, 29 Cal.3d at p. 386, italics added). Thus, appellant’s view that the exclusion permitted by subsection (c)(5) violates public policy unless it is narrowly confined to “interfamilial lawsuits” finds no support in Cocking, supra.
Nor does appellant’s rather amorphous equal protection argument find support in Cocking, supra. The Cocking court addressed a challenge to subdivision (c)(5) on equal protection grounds under these facts: Wife was injured while riding as a passenger in a car driven by husband, sued husband for damages, and coverage to husband for wife’s bodily injuries was denied because she was an insured under the automobile insurance policy at issue. (Cocking, supra, 29 Cal.3d at p. 386.) Clearly, Cocking involved an “interfamilial lawsuit” between a husband and wife where liability coverage was denied to the husband (rather than a permissive driver like Earl) for injuries caused to an insured passenger, his wife. Unsurprisingly, therefore, the California Supreme Court tailored its equal protection analysis to the facts of the case, observing that exclusions under subdivision (c)(5) “usually” applied to “family household members,” and noting that a primary rationale for the exclusion was to “prevent suspect inter-family legal actions which may not be truly adversarial and over which the insurer has little or no control.” (Id. at p. 389.)
The Supreme Court did not confine its equal protection analysis to interfamilial lawsuits. In addition to finding a rational basis for the exclusion in the prevention of collusive lawsuits (which rationale, we note, is equally applicable to a permissive driver), the Supreme Court also noted that subdivision (c)(5) “permits, but does not require,” (Cocking, supra, 29 Cal.3d at p. 389) insurers to exclude bodily injury to insureds, and does not “immunize an insured driver from bodily injury liability actions” by other insureds. (Id. at p. 390.)
In sum, in the context of facts involving an interfamilial lawsuit, the Supreme Court held that subdivision (c)(5) did not violate equal protection by “authoriz[ing] automobile liability insurers to exclude from coverage an insured’s bodily injury liability to any other personinsured under the policy.” (Cocking, supra, 29 Cal.3d at p. 386 [italics added].) Contrary to appellant’s suggestion, however, Cocking did not hold that subdivision (c)(5) violates equal protection where it authorizes insurers to exclude from coverage a permissive driver’s bodily injury liability to any other person insured under the policy. Thus, appellant’s contention that under Cocking subdivision (c)(5) violates equal protection as applied to permissive drivers is baseless. (See In re Chavez (2003) 30 Cal.4th 643, 656 [“As is well established, a case is authority only for a proposition actually considered and decided therein.”].) Furthermore, in purporting to state an equal protection argument, appellant fails to describe how permissive drivers are treated less favorably than any other insureds under the State Farm policies at issue.
In sum, we reject appellant’s argument that State Farm may not exclude indemnification for Earl for claims arising from bodily injury to Joseph Ranft because Earl is not a member of the Ranft family.
Appellant’s reliance on dicta in State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193 (Jacober) is similarly misplaced. In Ranft, we carefully distinguished Jacober and concluded it was not controlling because the ambiguity present in the policy at issue in Jacober is not present in the State Farm policies. (See Ranft, supra, at p. *6, fn. 4.) Moreover, the constitutionality of section 11580.1 subdivision (c)(5) was not before the court in Jacober. Thus, any dicta in Jacober allegedly pertaining to that issue was subsequently superseded by the court’s opinion in Cocking.
B. Exclusion of Coverage for Third Party Indemnification
Appellant also argues that because the exclusion clauses fail to expressly or conspicuously exclude coverage for third-party indemnification claims they must be strictly construed in favor of coverage for such claims. (See, e.g., Jacober, supra, 10 Cal.3d 1at p. 201 [exclusion clause in a policy of automobile insurance must be conspicuous, plain and clear or the insurer cannot rely on it to negate obligations to an insured].) However, the exclusion clauses in the State Farm policies do not fail on this point.
In California State Auto. Assn. Inter-Ins. Bureau v. Bourne (1984) 162 Cal.App.3d 89 (Bourne), the appellate court addressed the question of whether “an exclusion from coverage for bodily injury to an insured in a policy of automobile insurance renders the policy inapplicable to a cross-complaint against an insured for indemnity by a concurrent tortfeasor.” (Bourne, supra, 162 Cal.App.3d at pp. 90-91.) The facts in Bourne are similar in key respects to those here. Shirley Bourne was involved in a vehicle accident with Robert O’Connell. Shirley’s daughter Chandra was seriously injured in the accident. Shirley was the named insured and Chandra an insured under a CSAA automobile liability policy. Chandra filed a personal injury action alleging her mother and O’Connell both negligently caused her to be injured. O’Connell filed a cross-complaint against Shirley seeking partial indemnity for damages for which he, as a joint tortfeasor with Shirley, might become obligated to pay for Chandra’s injuries. CSAA then filed this action for declaratory relief. (Id. at p. 91.)
Like the State Farm policies here, the CSAA policy’s coverage clause provided that CSAA would “ ‘pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages’ ” because of bodily injury to a person arising from the use of the owned automobile. Also like the State Farm policies here, the CSAA policy had an exclusion clause stating that the policy does not apply for “bodily injury to any insured.” (Bourne, supra, 162 Cal.App.3d at p. 91.)
On appeal, defendants conceded “the action by Chandra against Shirley is within the exclusion” but claimed that the exclusion “is ambiguous with respect to CSAA’s obligation to defend Shirley against the third party action by O’Connell.” (Bourne, supra, 162 Cal.App.3d at p. 92.) The appellate court rejected this argument, stating that “the language in the policy is unambiguous on this point.” (Ibid.)
Noting that the policy obligates CSAA only for those damages for which an insured may become liable and that “[n]o obligation arises if the damages are attributable solely to a third party,” the court reasoned that “for the policy to be applicable to a third party action it must do so because the liability of an insured for covered damages is at issue.” (Bourne, supra, 162 Cal.App.3d at p. 92.) The court also noted that “[a]n indemnity action puts in issue the liability of a concurrent tortfeasor for the damages for which the tortfeasors are jointly liable. (Citation.)” (Ibid.) Accordingly, where “the concurrent tortfeasor is an insured, the action puts in issue the damages for which the insured is liable and to that extent brings it within the policy. But the policy provides coverage and a defense only if the damages at issue are ‘payable under the terms of this policy.’ Damages are not payable, by reason of the exclusion clause, if they are damages for bodily injury to any insured. Thus, the operative facts which bring an indemnity action within the policy also subject it to the exclusion [fn. omitted]. Since the damages upon which the concurrent liability of an insured (Shirley) are predicated in the O’Connell action are damages to an insured (Chandra), the exclusion clause negates any obligation of CSAA to defend Shirley in the action.” (Bourne, supra, 162 Cal.App.3d at pp. 92-93.)
Bourne’s reasoning is unassailable and is equally applicable here. In this case, the damages upon which the concurrent liability of an insured (Earl) are predicated in appellant’s cross-complaint for indemnity are damages to an insured (Joseph Ranft). Thus, as in Bourne, the exclusion clauses in the policies negates any obligation on State Farm’s part to defend Earl in appellant’s action for indemnification. (Bourne, supra, 162 Cal.App.3d at p. 93.)
Disposition
The judgment is affirmed. Appellant shall bear costs on appeal.
We concur: Pollak, Acting P. J., Siggins, J.