Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a judgment and postjudgment order of the Superior Court of Orange County, Super. Ct. No. 05CC12086, Daniel J. Didier, Judge.
Law Offices of Michael F. Smith and Michael F. Smith for Plaintiffs, Cross-defendants and Appellants.
Graham & Associates and Bruce N. Graham for Defendant, Cross-complainant and Respondent.
OPINION
FYBEL, J.
INTRODUCTION
Plaintiffs Kim Lien Thi Tran and Minh Tran (collectively plaintiffs) appeal from a judgment entered in favor of defendant Amex Assurance Company (Amex). Plaintiffs sued Amex for breach of contract based on allegations Amex refused to pay claims on an automobile insurance policy it issued to plaintiffs on the ground they misrepresented the identity of the registered owner of the subject vehicle. Plaintiffs and Amex each moved for judgment based on stipulated facts. The trial court concluded plaintiffs had concealed a material fact on the insurance application by failing to disclose that their niece was the registered owner of the vehicle. Judgment was entered accordingly.
We affirm. For reasons discussed in detail post, we reject plaintiffs’ arguments that (1) the record does not show plaintiffs concealed a material fact; (2) Amex waived the right to rescind the policy because some portions of the insurance application were not completed; and (3) the statement of decision “implies that insurance coverage would extend in this case to an injured third party.”
STIPULATED FACTS
On September 24, 2004, plaintiffs applied to Amex for automobile insurance for a 2005 Toyota Camry (the vehicle). Plaintiffs jointly completed and signed a written insurance application (the application). On the first page of the application, under the heading “Vehicle Information,” they were asked to state the name of the registered owner of the vehicle. The application stated, “Registered owner, if not you or spouse.” Plaintiffs left the space next this inquiry blank. Plaintiffs knew at the time they filled out the application that their niece, Ann K. Tran, was the registered owner of the vehicle, but they never disclosed that fact to Amex.
Plaintiffs tendered the premium to Amex; Amex accepted the premium and issued an automobile policy to plaintiffs for the vehicle with effective coverage dates of October 12, 2004 to April 12, 2005. According to the parties’ stipulation: Amex “issued the policy in reliance on the completed application and with the belief that the questions which it had submitted to Lien Tran and Minh Tran on the application had been truthfully answered.” Amex “conducted no further investigation as to the identity of the registered owner of the [vehicle] before issuing the policy.” Had plaintiffs “answered the question about the registered owner of the [vehicle] by revealing that the registered owner was Ann K. Tran, Amex Assurance Company would not have issued the policy on the same terms and conditions.”
A copy of the policy shows it also covers two other automobiles; nothing related to those two automobiles is at issue in this appeal.
On October 24, 2004, Kim Tran was involved in an accident while driving the vehicle. After claims arising from that accident were tendered to Amex, it conducted an investigation through which it learned the registered owner of the vehicle was Ann K. Tran, not plaintiffs. The parties further stipulated: “Based on that discovery Amex Assurance Company denied coverage for the claims and Amex Assurance Company rescinded the policy, including the reimbursement of the policy premium which had been paid.”
PROCEDURAL BACKGROUND
Plaintiffs sued Amex and The American Express Property Casualty Companies for breach of contract and tortious breach of insurance contract based on the allegation Amex wrongfully denied claims made on the policy following the accident. In the first amended complaint, plaintiffs prayed for, inter alia, a judgment awarding them $19,000 for property damages, $2,720 for medical expenses incurred by Kim Tran, indemnification in the amount of $2,303.83 paid to the other party involved in the accident, attorney fees incurred in defending claims asserted against Kim Tran as a result of the accident, and punitive damages.
Amex filed a cross-complaint against plaintiffs for declaratory relief, seeking a declaration that no Amex policy of insurance affords any coverage or protection to plaintiffs with respect to their claims arising from the accident. Amex alleged plaintiffs made a material misrepresentation on the application by failing to identify the actual registered owner of the vehicle.
Plaintiffs and Amex each filed a motion for judgment on the first amended complaint and the cross-complaint based on stipulated facts. The parties further stipulated that “Plaintiffs dismiss ‘The American Express Property Casualty Companies’ from the case, they dismiss the Second Cause of Action of the Complaint for Tortious Breach of the Insurance Contract, they dismiss all claims for tort damages, they dismiss all claims for punitive damages, and they proceed only on their claims for breach of contract, contract damages, and costs of suit.”
In March 2007, the trial court issued a statement of decision which stated Amex’s motion for judgment on the first amended complaint and the cross-complaint was granted, and “Defendant Amex is entitled to rescind the insurance policy based on Plaintiffs’ concealment of the ownership of the [vehicle]. At all material times, Plaintiffs knew that Ann Tran was the owner of the [vehicle] and never disclosed that fact to Defendant Amex. . . . That information is material to the issuance of the insurance policy because Defendant Amex would not have issued the policy on the same terms and conditions had it known about Ann Tran.” The statement of decision further stated, “[j]udgment for Defendant/Cross-Complainant Amex Assurance Company, as the prevailing party on the First Amended Complaint and Cross-complaint. A Declaratory judgment will issue that the Amex Assurance policy provides no coverage and that it was rescinded from its inception. Defendant/Cross-Complainant Amex to prepare the judgment.”
On April 5, 2007, plaintiffs filed a motion to vacate and enter a different judgment on grounds (1) “[t]he statement of decision applied the wrong standard regarding materiality” and (2) the court “erred by deciding that defendant AMEX did not have a duty to investigate plaintiffs’ insurability.”
On April 11, 2007, judgment was entered in favor of Amex on the first amended complaint and the cross-complaint, stating, “[t]he policy affords no coverage and was rescinded from its inception.” On May 11, the trial court denied plaintiffs’ motion to vacate and enter a different judgment. Plaintiffs appealed from the trial court’s judgment and order denying their motion to vacate the judgment and enter a different judgment.
DISCUSSION
Plaintiffs argue the judgment must be reversed because: (1) the record does not show plaintiffs concealed a material fact; (2) Amex waived the right to rescind the policy because some portions of the application were not completed; and (3) the statement of decision “implies that insurance coverage would extend in this case to an injured third party.” We address each of plaintiffs’ contentions in turn.
I.
The Stipulated Facts Support the Trial Court’s Finding Plaintiffs Concealed a Material Fact from Amex.
Insurance Code section 359 provides: “If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.” Section 334 provides: “Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.”
The record shows the application, which was “jointly completed and signed” by plaintiffs, contained a false representation. The application provided a space for plaintiffs to identify “Registered owner, if not you or spouse.” Plaintiffs left that space blank, and thereby falsely stated one of them was the registered owner of the vehicle. Above the plaintiffs’ signatures, the application stated, “I have read and completed this application for auto insurance and declare to the best of my knowledge and belief all of the foregoing statements are true, and that these statements are offered as an inducement to the company to approve the policy for which I am applying.” The application further stated, “I understand that if the foregoing statements are discovered to be untrue or if information is not disclosed, the policy for which I am applying may be declined or canceled, or coverage rescinded.”
The record further shows that at no time after submitting the application did plaintiffs disclose to Amex that Ann K. Tran was the registered owner of the vehicle. Amex issued the policy in reliance on the information provided by the application, which included the false representation plaintiffs were the registered owners of the vehicle.
The record also shows the identity of the registered owner of the vehicle was material. In Mitchell v. United National Ins. Co. (2005) 127 Cal.App.4th 457, 474, the appellate court stated, “[t]he test for materiality is whether the information would have caused the underwriter to reject the application, charge a higher premium, or amend the policy terms, had the underwriter known the true facts.” (Italics added.) As pointed out by the trial court in the statement of the decision, the parties had agreed the identity of the vehicle’s registered owner was material, by stipulating, “[h]ad Lien Tran or Minh Tran answered the question about the registered owner of the [vehicle] by revealing that the registered owner was Ann K. Tran, Amex Assurance Company would not have issued the policy on the same terms and conditions.”
Plaintiffs argue they were not responsible for their failure to fill in the blank next to the registered owner inquiry in the vehicle information section of the application because “it was [Amex] who filled in part of the vehicle information section. . . . The balance of the section was left blank. The section does not instruct [plaintiff]s to fill in the section. An insured should not be required to fill in a blank on an insurance application unless they are instructed to do so.”
Plaintiffs did not produce any evidence explaining why they failed to provide information in the remaining blanks, as called for in the application. The application’s inquiry into the identity of the registered owner is contained in a section entitled “Vehicle Information.” The application is not ambiguous in its request for the identity of the registered owner of the vehicle. Plaintiffs did not produce evidence they were ever told it was unnecessary to provide all of the information requested of them in the application.
Plaintiffs argue substantial evidence did not support the trial court’s finding that plaintiffs themselves filled out part of the vehicle information section of the application. In the statement of decision the trial court stated, “[p]laintiffs argue that the application portion regarding vehicle information is ambiguous or misleading because it was not phrased in the form of a question and that they are not fluent in English. The argument is unconvincing. First, Plaintiffs’ lack of fluency in English is not in the stipulated facts. Second, a review of the application form shows that [the] majority of it does not directly ask a question. There is no question in the section for driver information and yet Plaintiffs filled it out. . . . Plaintiffs also filled out a section of the vehicle information, though they failed to complete the part regarding ownership of the car. . . . Plaintiffs’ ability to fill out the other portions of the application that did not directly ask a question undermines their argument only the section under vehicle information that states ‘registered owner, if not you or spouse’ was ambiguous or misleading.” (Italics added.)
The stipulated facts establish plaintiffs were given the application to complete after some information had already been added to the vehicle information section. Plaintiffs did not add any information to the vehicle information section of the application. The trial court’s finding in the statement of decision that “[p]laintiffs also filled out a section of the vehicle information” was therefore incorrect. The trial court’s erroneous finding, however, does not affect the result. As discussed ante, the application is not ambiguous in its request for information regarding the registered owner of the vehicle, regardless of whether plaintiffs or an agent of Amex filled out other portions of the application.
II.
Amex Did Not Waive the Right to Rescind the Policy.
Plaintiffs argue Amex “waived its right to rescind the contract based on the lack of responses on the insurance application. [Amex] saw the lack of responses on the application before issuing the policy, yet issued it anyway.”
Insurance Code section 336 provides in relevant part that an insurer may waive its right to material information either “(a) by the terms of insurance or (b) by neglect to make inquiries as to such facts . . . .” The application was not incomplete as to its request for the identity of the registered owner of the vehicle. By failing to identify the registered owner in the space next to the inquiry “Registered owner, if not you or spouse,” plaintiffs asserted that one of them was the registered owner. Nothing in the record shows Amex had any reason to believe otherwise. (Lunardi v. Great-West Life Assurance Co. (1995) 37 Cal.App.4th 807, 824 [“An insurer does not waive its right to rescind a policy on the ground of false representations if it was unaware of the falsity of those representations”].)
In their opening brief, plaintiffs cite Transamerica Premier Ins. Co. v. Miller (9th Cir. 1994) 41 F.3d 438 and Anaheim Bldrs. Supply, Inc. v. Lincoln Nat. Life Ins. Co. (1965) 233 Cal.App.2d 400, in support of the proposition “[a]n insurer’s issuance of a policy in the face of what appears to be a lack of sufficient information to allow the insurer to determine its risks estops the insurer from, or waives the insurer’s right to cite that lack of information as a ground for avoiding coverage.” Neither case considered whether an insurer has waived the right to rescind an insurance policy based on a material misrepresentation made by the insured in an application because the insured failed to complete other portions of the application.
In Transamerica Premier Ins. Co. v. Miller, supra, 41 F.3d 438, the Ninth Circuit Court of Appeals affirmed a summary judgment holding an insurer liable to the customers of Guaranty Escrow Services, Inc. (GES), an escrow business owned by E. Robert Brown, to which the insurer had issued a bond. The bond stated in part that the insurer, “in consideration of an annual premium, agree[d] to reimburse the persons, firms or corporations, hereinafter called ‘Owner’ whose names appear on the attached schedule” for certain losses suffered as a result of larceny or embezzlement by GES. (Id. at p. 440.) On appeal, the insurer argued “the lack of a schedule identifying an ‘owner’ or ‘owners’ render[ed] the bond indefinite and void.” (Id. at p. 442.) The appellate court rejected the insurer’s argument, stating the insurer “issued the bond, renewed the bond, and continued to accept premiums even though no schedule was attached. Moreover, Brown and at least some of his customers relied on the presence of the bond. Brown said he told many of his customers that he was bonded for their protection. Therefore, [the insurer] either waived the term of the bond that limited its otherwise unlimited liability, or is estopped from asserting it. With the limiting term waived, only the promise to reimburse customers of GES remains.” (Id. at p. 443.)
In Anaheim Bldrs. Supply, Inc. v. Lincoln Nat. Life Ins. Co., supra, 233 Cal.App.2d 400, the appellate court rejected the plaintiff’s argument the defendant insurer had waived its right to rescind a life insurance policy issued to a company to cover one of its key officers. In completing the application, the officer concealed information regarding a headache, chest pains, above-normal blood pressure, and “when and why he last consulted a physician.” (Id. at p. 403.) The plaintiff’s waiver argument stemmed from the insurer’s abandoned attempt to obtain further information about the officer’s medical history before it issued the policy. (Id. at p. 410.) The appellate court held, “[t]he record . . . does not indicate that the insurance company ever had any information prior to the death of [the officer] of any fact which differed from the representations which he made in the application, and it does not seem that there is anything in the answers to the questions in . . . the application which distinctly implies the existence of facts to the contrary of what is said.” (Id. at p. 411.)
Here, the record contains no evidence showing Amex was on notice that plaintiffs were not the registered owners of the vehicle before claims were made on the policy. Amex did not waive its right to rescind the policy.
III.
The Statement of Decision Did Not Imply That the Policy Provided Insurance Coverage to Injured Third Parties.
Plaintiffs argue, “[t]he court’s statement of decision implies that insurance coverage would extend in this case to an injured third party. . . . This finding would require the court to find [plaintiff]s as the prevailing party. The stipulation provides that should the court find that the policy provides coverage, then it should find that [plaintiff]s are the prevailing party.”
The statement of decision does not imply that insurance coverage under the policy would extend to an injured third party under the holding of Barrera v. State Farm Mut. Automobile Ins. Co. (1969) 71 Cal.2d 659. The portion of the statement of decision, cited by plaintiffs in support of their argument, addressed the inapplicability of Barrera v. State Farm Mut. Automobile Ins. Co. and its holding that “an automobile liability insurer must undertake a reasonable investigation of the insured’s insurability within a reasonable period of time from the acceptance of the application and the issuance of a policy.” (Id. at p. 663.)
The statement of decision states in relevant part: “Plaintiffs[] argue that Defendant Amex cannot rescind because it failed to fulfill its duty to investigate their insurability, citing to Barrera v. State Farm Mutual Auto. Ins. Co.[, supra, 71 Cal.2d 659]. Barrera is factually distinguishable and does not apply here. Barrera involved an action by an injured third party, not the insured, against the insured’s insurance company, while Plaintiffs here are the insured in this action. The duty to investigate in B[a]rrera is a duty owed to third parties who are injured by an insured’s negligence. That duty does not apply to the insured because it conflicts with the provisions in the Insurance Code that require an applicant to disclose all material facts within his knowledge and entitle an insurer to rescind an insurance policy based on an insured’s concealment of material facts.”
Furthermore, plaintiffs never objected to the statement of decision on the ground it omitted a finding on Amex’s liability to third parties. “If the party challenging the statement of decision fails to bring omissions or ambiguities in it to the trial court’s attention, then, under Code of Civil Procedure section 634, the appellate court will infer the trial court made implied factual findings favorable to the prevailing party on all issues necessary to support the judgment, including the omitted or ambiguously resolved issues.” (Fladeboe v. American Isuzu Motors, Inc. (2007) 150 Cal.App.4th 42, 59-60.) We therefore decline to infer the trial court made implied factual findings, particularly findings beyond the scope of the issues before the court, that would undermine the judgment in this case.
DISPOSITION
The judgment and postjudgment order are affirmed. Respondent shall recover costs on appeal.
WE CONCUR: RYLAARSDAM, ACTING P. J., ARONSON, J.