PROGRESSIVE CHOICE INSURANCE COMPANY, Plaintiff and

Filed 8/12/13

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

PROGRESSIVE CHOICE

INSURANCE COMPANY,

Plaintiff and Respondent,

CALIFORNIA STATE AUTOMOBILE

ASSOCIATION INTER-INSURANCE

BUREAU,

Defendant and Appellant.

B242429

(Los Angeles County

Super. Ct. No. BC472603)

APPEAL from a judgment of the Superior Court of Los Angeles County,

Maureen Duffy-Lewis, Judge. Affirmed.

Morton & Lulofs and William R. Morton for Defendant and Appellant.

Yocis & Cox and Stephen M. Smith for Plaintiff and Respondent.

__________________________________

INTRODUCTION

This case concerns the allocation of an Underinsured Motorist (UIM) loss

between two automobile insurance companies. The insured was covered by

automobile insurance policies issued by Progressive Choice Insurance Company

(Progressive) and California State Automobile Association Inter-Insurance Bureau

(CSAA). He was injured in an automobile accident caused by an underinsured

motorist. After settling with the underinsured motorist, the insured claimed a

$62,500 loss under the UIM provisions of both policies. Progressive paid the

entire claim, and sought contribution from CSAA. Progressive contended that

under Insurance Code section 11580.2, subdivision (d),

the UIM loss should be

allocated on a pro-rata basis between the two companies. The trial court agreed,

and granted summary judgment in favor of Progressive. CSAA contends the trial

court erred, as under section 11580.2, subdivision (c)(2), its policy does not apply

because the insured was covered by the Progressive policy; thus, the entire loss

should be borne by Progressive. On appeal, Progressive contends CSAA may not

rely on section 11580.2, subdivision (c)(2) because the CSAA policy lacked the

necessary language to invoke that statutory exclusion. We agree. Absent such

statutory exclusion, both insurance policies are implicated, and the mandatory pro-

rata allocation of section 11580.2, subdivision (d) applies. Accordingly, we affirm

the grant of summary judgment in favor of Progressive.

STATEMENT OF THE FACTS

The parties stipulated to the following facts.

All further statutory citations are to the Insurance Code, unless otherwise

stated.

A. Underlying Claims

On March 27, 2006, Benjamin White was injured in a traffic collision, while

riding as a passenger in a vehicle being operated by Scott A. Tortora. The party

who caused the collision was underinsured. White was insured under two

automobile insurance policies. The first policy, issued by Progressive to Tortora,

insured the vehicle. It provided underinsured motorist bodily injury coverage with

limits of $100,000 for each person. The second policy, issued by CSAA to

Benjamin White as the named insured, provided underinsured motorist bodily

injury coverage with limits of $50,000 for each person.

White settled with the at-fault driver‟s automobile insurance company for

the policy limit of $25,000. White then made a claim for Underinsured Motorist

benefits under the Progressive and CSAA policies. CSAA denied coverage.

Progressive paid the sum of $62,500 to White. Progressive demanded that CSAA

reimburse Progressive $20,833.33, the pro-rata share of the payment made to

White based upon the applicable policy limits of the two policies. CSAA denied

any obligation to contribute and reimburse Progressive, arguing that the

Progressive policy constituted the sole source of underinsured motorist coverage to

White.

B. Progressive Insurance Policy

The Progressive insurance policy provided underinsured motorist coverage

under Part III (A) of the policy. It provided: “Subject to the Limits of Liability, if

you pay a premium for Uninsured/Underinsured Motorist Bodily Injury Coverage,

we will pay for damages, other than punitive or exemplary damages, which an

insured person is entitled to recover from the owner or operator of an uninsured

motor vehicle or underinsured motor vehicle because of bodily injury: [¶]

1. sustained by an insured person; [¶] 2. caused by accident; and [¶] 3. arising

out of the ownership, maintenance, or use of an uninsured motor vehicle or

underinsured motor vehicle.”

Under “Exclusions,” the policy stated that “Coverage under this Part III(A)

is not provided for bodily injury sustained by any person while using or

occupying: . . . [¶] . . . [¶] 6. a motor vehicle, other than a covered vehicle, if the

owner has insurance similar to that provided under this Part III(A).”

Part III(A) also included an “Other Insurance” provision. That provision

stated: “If there is other applicable uninsured or underinsured motorist coverage,

the damages which an insured person is entitled to recover under this Part III(A)

shall be deemed not to exceed the highest limit of any applicable coverage. We

will pay only our share of the damages. Our share is the proportion that our Limit

of Liability bears to the total of all available coverage limits. Any insurance we

provide shall be excess over any other uninsured or underinsured motorist

coverage, except for bodily injury to you or a relative when occupying a covered

vehicle.”

C. CSAA Insurance Policy

The CSAA insurance policy provided underinsured motorist coverage under

Part IV of the policy.

Under “Coverage,” the policy provided: “We will pay

damages, other than punitive or exemplary damages, for bodily injury which an

insured person is legally entitled to recover from the owner or operator of an

uninsured motor vehicle. The bodily injury must be caused by accident and arise

out of the ownership, maintenance or use of the uninsured motor vehicle.”

The policy enumerated several exclusions from coverage. It provided:

“This coverage does not apply to bodily injury sustained by an injured person:

Although Part IV mentions only “uninsured motor vehicle,” CSAA

stipulated it also covered underinsured motorist claims.

“(1) while occupying a motor vehicle, other than an insured motor vehicle,

owned by any insured person, or leased to any insured person, under a

written contract for a period of six months or longer, or through being struck

by such a motor vehicle;

“(2) if that person or the representative of that person, without our written

consent, makes any settlement or prosecutes to judgment any action against

any person who may be legally liable therefor;

“(3) while occupying your auto when used to carry persons or property for a

charge. . . .

“Uninsured Motorist Coverage shall not apply to the benefit of any insurer

or self-insurer under any workers‟ compensation or disability benefits law or

any similar law or to the direct benefit of the United States, any state or any

political subdivision thereof.”

The policy further provided that the coverage limit was “[t]he limits of

liability shown in the Declarations.” However, “[i]f a claim is made for bodily

injury caused by an underinsured motor vehicle, we will pay only after the limits of

bodily injury liability policies applicable to all insured motor vehicles causing the

injury have been exhausted by payment of judgments and settlements, and proof of

such payment is submitted to us.”

Finally, the policy had an “Other Insurance” provision, which provided:

“With respect to bodily injury to an insured person occupying a motor

vehicle not owned by you, the coverage under this Part applies only as

excess insurance over any similar insurance available to such insured person

and covering such automobile as primary insurance. In this situation this

coverage will apply only in the amount by which the limits of liability for

this coverage exceeds the limits of liability of such other insurance.

“If there is other similar insurance on a loss covered by this Part, we will pay

our proportionate share as our limit of liability bears to the total limits of all

applicable similar insurance. But, any insurance for a vehicle you do not

own is excess over any applicable similar insurance.”

PROCEEDINGS BELOW

On November 9, 2010, Progressive filed an action for contribution in

superior court. In the complaint, Progressive sought reimbursement from CSAA

on a pro-rata basis. CSAA filed an answer, generally denying the allegations and

asserting that the Progressive policy provided the sole coverage for the insured‟s

UIM claim.

Progressive and CSAA filed competing motions for summary judgment.

CSAA contended that under section 11580.2, subdivision (c)(2), its policy

provided no UIM coverage to White because the Progressive policy already

provided “similar” UIM coverage. Progressive contended it did not provide

“similar” UIM coverage because the amount of coverage was different; it provided

$100,000 per person, whereas CSAA provided only $50,000 per person. The trial

court granted Progressive‟s motion for summary judgment. On May 29, 2012,

judgment was entered in the amount of $20,833.33. CSAA timely appealed.

DISCUSSION

On appeal, Progressive affirmatively disavows the argument that prevailed

below -- that section 11580.2, subdivision (c)(2) was inapplicable because the

Progressive policy was not “similar” to the CSAA policy. Rather, Progressive now

contends section 11580.2, subdivision (c)(2) is inapplicable because CSAA failed

to include the necessary language to invoke that statutory exclusion in its policy.

CSAA concedes that Progressive may change its argument on appeal to assert an

issue of law based on undisputed facts. Accordingly, we address only the issue

presented to us: whether section 11580.2, subdivision (c)(2) operates to exclude

coverage as a matter of law.

A. Statutory UIM Coverage Scheme

Section 11580.2, the uninsured motorist law, creates a statutory scheme to

protect “innocent drivers against losses caused by negligent and financially

irresponsible motorists.” (State Farm Mut. Auto. Ins. Co. v. Yang (1995)

35 Cal.App.4th 563, 567-568.)

Section 11580.2, subdivision (a)(1) provides in pertinent part: “No policy of

bodily injury liability insurance covering liability arising out of the ownership,

maintenance, or use of any motor vehicle . . . shall be issued . . . in this state to the

owner or operator of a motor vehicle . . . unless the policy contains, or has added to

it by endorsement, a provision with coverage limits at least equal to the limits

specified in subdivision (m) and in no case less than the financial responsibility

requirements specified in Section 16056 of the Vehicle Code insuring the insured,

the insured‟s heirs or legal representative for all sums within the limits that he, she,

or they, as the case may be, shall be legally entitled to recover as damages for

bodily injury or wrongful death from the owner or operator of an uninsured motor

vehicle.”

Section 11580.2, subdivision (m) provides that the minimum UIM bodily

injury coverage limit is $30,000 per person. Vehicle Code section 16056 provides

that the minimum liability coverage is $15,000 per person. Section 11580.2,

subdivision (b) defines “uninsured motor vehicle” to include “an „underinsured

motor vehicle‟ as that term is defined in [section 11580.2,] subdivision (p).” That

subdivision defines an “[u]nderinsured motor vehicle” as “a motor vehicle that is

an insured motor vehicle but insured for an amount that is less than the uninsured

motorist limits carried on the motor vehicle of the injured person.” (§ 11580.2,

subd. (p)(2).)

Thus, section 11580.2, subdivision (a)(1) requires that all policies

for automobile insurance issued in this state provide underinsured motorist

coverage with limits of at least $30,000 per person.

Section 11580.2, subdivision (c) limits the UIM coverage provided in

section 11580.2, subdivision (a)(1). It provides in pertinent part: “The insurance

coverage provided for in this section does not apply either as primary or as excess

coverage: [¶] . . . [¶]

“(2) To bodily injury of the insured while in or upon or while entering into

or alighting from a motor vehicle other than the described motor vehicle if

the owner thereof has insurance similar to that provided in this section.

“(3) To bodily injury of the insured with respect to which the insured or his

or her representative shall, without the written consent of the insurer, make

any settlement with or prosecute to judgment any action against any person

who may be legally liable therefor.

“(4) In any instance where it would inure directly or indirectly to the benefit

of any workers‟ compensation carrier . . . . [¶] . . . [¶]

“(6) To bodily injury of the insured while occupying a motor vehicle owned

by an insured or leased to an insured under a written contract for a period of

six months or longer, unless the occupied vehicle is an insured motor

vehicle. . . .

“(7) To bodily injury of the insured when struck by a vehicle owned by an

insured . . . .

“(8) To bodily injury of the insured while occupying a motor vehicle rented

or leased to the insured for public or livery purposes.” (§ 11580.2,

subd. (c).)

CSAA included a similar definition for “underinsured motor vehicle” in its

policy.

The statutory exclusion at issue is section 11580.2, subdivision (c)(2). That

statutory exclusion is “commonly known as the „excess insurance clause,‟ and is

partially designed to prevent double recovery in situations where more than one

policy‟s uninsured motorist protection is involved. It also attempts to [e]nsure the

carriers that no company will have to pay more than its fair share of the loss.”

(California State Auto. Assn. Inter-Ins. Bureau v. Huddleston (1977)

68 Cal.App.3d 1061, 1068 [where victims have not been made whole by an

insurance policy covering the vehicle involved in the accident, they may avail

themselves of the UIM coverage in their own insurance policy].)

The fair allocation of UIM losses was further addressed by the Legislature

when it enacted section 11580.2, subdivision (d). That statutory provision states:

“Subject to paragraph (2) of subdivision (c), the policy or endorsement may

provide that if the insured has insurance available to the insured under more than

one uninsured motorist coverage provision, any damages shall not be deemed to

exceed the higher of the applicable limits of the respective coverages, and the

damages shall be prorated between the applicable coverages as the limits of each

coverage bear to the total of the limits.” (§ 11580.2, subd. (d).)

“Section 11580.2, subdivision (d), is commonly referred to as an

„antistacking clause.‟” (Allstate Ins. Co. v. Mercury Ins. Co. (2007)

154 Cal.App.4th 1253, 1259 (Allstate).) In Prieto v. State Farm Mut. Automobile

Ins. Co. (1969) 268 Cal.App.2d 891 (Prieto), the appellate court held that where

multiple automobile insurance policies are applicable, an insurance policy

containing the pro-rata provision permitted by section 11580.2, subdivision (d)

takes precedence over an insurance policy providing that it is excess coverage. (Id.

at pp. 893-894; Allstate, supra, at p. 1260 [“Where the proration provision is

included in a [UIM] insurance policy, it must be given effect.”]; Planet Ins. Co. v.

United Services Automobile Assn. (1994) 23 Cal.App.4th 1256, 1262 (Planet)

[where two automobile insurance policies provide uninsured motorist coverage,

and one policy contains an excess coverage clause in its “other insurance”

provisions while the other contains a statutory proration clause, the proration

clause takes precedence].)

B. CSAA UIM Coverage

It is well established that the rights of an insured under the uninsured

motorist provisions of an automobile liability policy are to be determined by the

terms of the policy, provided it grants benefits at least equal to those required by

the terms of section 11580.2. (Darrah v. California State Automobile Assn. (1968)

259 Cal.App.2d 243, 246 (Darrah).) Here, as stipulated by the parties, the CSAA

policy provided UIM coverage with limits of $50,000 per person. This is in excess

of the default UIM coverage required by section 11580.2, subdivision (a)(1).

The CSAA policy expressly excludes UIM coverage in several situations.

Under “EXCLUSIONS,” the policy provides that there will be no UIM coverage:

(1) where the insured occupies a motor vehicle owned by an insured person or

leased by an insured person under a written contract for a period of six months or

longer; (2) where the insured is struck by such a vehicle; (3) where the insured

settled with the negligent party without the consent of the insurer; (4) where the

insured occupies a vehicle used to carry person or property for a charge; and

(5) where any insurer or self-insurer would benefit under worker‟s compensation

or disability benefits laws. These contractual exclusions are substantially similar

to several statutory exclusions set forth in section 11580.2, subdivision (c). (See

§§ 11580.2, subd. (c)(3) [unconsented settlement or judgment], (4) [worker‟s

compensation], (6) [motor vehicle owned or leased under a written contract for a

period of six months or longer], (7) [struck by such a vehicle], (8) [motor vehicle

rented or leased for public or livery purposes].)

Notably, the statutory exclusion of section 11580.2, subdivision (c)(2) is not

among those listed in the CSAA policy‟s exclusions. The CSAA policy does not

exclude UIM coverage where an insured suffers bodily injury “while in or upon or

while entering into or alighting from a motor vehicle other than the . . . motor

vehicle [described as covered under this section] if the owner thereof has insurance

similar to that provided in this section.” (§ 11580.2, subd. (c)(2).)

CSAA contends the “Other Insurance” provision of its policy expressly

incorporates section 11580.2, subdivision (c)(2). That provision provides: “With

respect to bodily injury to an insured person occupying a motor vehicle not owned

by you, the coverage under this Part applies only as excess insurance over any

similar insurance available to such insured person and covering such automobile as

primary insurance. . . . [¶] If there is other similar insurance on a loss covered by

this Part, we will pay our proportionate share as our limit of liability bears to the

total limits of all applicable similar insurance. But, any insurance for a vehicle you

do not own is excess over any applicable similar insurance.”

The “Other Insurance” provision, however, does not contain language

substantially similar to that set forth in section 11580.2, subdivision (c)(2). The

contractual provision states that where an insured is injured while occupying a

vehicle belonging to a third party, the policy will provide UIM coverage, although

it will be as excess insurance. In contrast, the statutory exclusion of section

11580.2, subdivision (c)(2) states that there will be no UIM coverage at all. We

note that when CSAA has wished to include the statutory exclusion provided by

section 11580.2, subdivision (c)(2), it has done so. In the 1968 case of Darrah, the

appellate court noted that CSAA had issued an automobile policy containing the

following exclusionary language: “„With respect to bodily injury sustained by any

insured occupying any automobile, other than one owned by the named insured,

the insurance hereunder shall not apply if the owner of such automobile has

insurance similar to that provided for herein.‟” (Darrah, supra, 259 Cal.App.2d at

p. 246 [holding UIM coverage in CSAA policy did not apply because of

exclusionary language in policy].) Thus, the “Other Insurance” clause is

insufficient to invoke the statutory exclusion of section 11580.2, subdivision (c)(2).

CSAA contends it need not expressly incorporate the language of section

11580.2, subdivision (c)(2) in order to exclude the UIM coverage that it provided

to the insured. This argument was rejected in Utah Property & Casualty Ins. etc.

Assn. v. United Services Auto. Assn. (1991) 230 Cal.App.3d 1010 (Utah Property)

and Lumberman’s Mut. Cas. Co. v. Wyman (1976) 64 Cal.App.3d 252. Those

cases held that where an insurer provides greater coverage than required under the

law, the insurer may not rely on statutory restrictions on coverage that were not

expressly incorporated into the insurance policy.

In Utah Property, the insurer provided UIM coverage where the at-fault

driver‟s motor vehicle was insured at the time of the accident, but the at-fault

driver‟s insurer became insolvent. (Utah Property, supra, 230 Cal.App.3d at

p. 1015.) Section 11580.2, subdivision (b)(2) stated that if the insurer became

insolvent within one year of the accident, the UIM coverage provided by section

11580.2 would apply. The insurer contended that this one-year limitation was

incorporated into its policy as a matter of law. The court disagreed. (Id. at

p. 1016.) The court noted the well-settled legal principle that an insurance policy

should be read as a layperson would read it. (Id. at p. 1015.) It determined that

“[b]ecause no time limitation is placed upon insolvency, a layperson reading the

policy would have no reason to suspect that the insolvency would have to occur

within a year of the accident.” (Ibid.) Accordingly, “the one-year limitation in

subdivision (b)(2) was not incorporated in the subject insurance policy so as to

limit coverage otherwise afforded by the policy.” (Id. at p. 1021.)

In Lumberman’s Mut. Cas. Co. v. Wyman, the insurer provided the

uninsured motorist coverage required under section 11580.2. (Lumberman’s Mut.

Cas. Co. v. Wyman, supra, 64 Cal.App.3d at p. 256.) Under “Exclusions,” the

insurer listed three, including where the “insured, his legal representative or any

person entitled to payment under this coverage shall, without written consent of the

company, make any settlement with any person or organization who may be

legally liable therefor.” (Id. at p. 257.) The court noted that this contractual

exclusion essentially repeated the statutory language in section 11580.2, subd.

(c)(3), except that the words “„or prosecute to judgment any action‟” were omitted

from the policy language. (Ibid.) The insured entered into an unconsented

judgment, and then made a claim under the UIM policy. (Id. at p. 254.) The

insurer denied coverage, arguing that “subdivision (c)(3) of section

11580.2 . . . should be read into the contract as a matter of law and that it controls

the present case.” (Id. at p. 257.) The court disagreed. It held that “the plain

language of the limitation in question here refers only to an exclusion in the event

of unconsented settlement; there is no mention of a consent condition to obtaining

judgment, although it is clear that such a limitation is permissible under paragraph

(3) of subdivision (c) of section 11580.2 . . . . [¶] To the extent that there may be

any ambiguity in the terms of the policy, that ambiguity must be resolved against

respondent insurer. [Citation.] In the absence of a specific provision in the policy

prohibiting the insured from prosecuting to judgment any action without the

written consent of the insurer, respondent is not entitled to rely on subdivision

(c)(3) of section 11580.2 of the Insurance Code.” (Id. at pp. 259-260.)

Here, CSAA expressly provided UIM coverage in an amount in excess of

the default coverage limits required by section 11580.2. Thus, it cannot rely upon

the statutory exclusions that would apply to that default coverage. (Cf. Samson v.

Transamerica Ins. Co. (1981) 30 Cal.3d 220, 231 [where insurance contract does

not have mandated coverage, the statutory provisions governing the mandated

coverage are incorporated into the insurance contract by law].)

As noted, CSAA‟s policy set forth several exclusions that were substantially

similar to the statutory exclusions provided in section 11580.2, subdivision (c).

None, however, mirrored the language of subdivision (c)(2). Despite having

previously drafted policies with language sufficient to invoke the statutory

exclusion of subdivision (c)(2), see Darrah, supra, 259 Cal.App.2d at p. 246,

CSAA neither included such language nor referred to the statutory exclusions in

section 11580.2, subdivision (c). Thus, a layperson reading the policy would have

no reason to suspect that any exclusion other than those listed in the CSAA policy

would apply. (See Utah Property, supra, 230 Cal.App.3d at p. 1021 [“Laypersons

cannot be expected to know of statutory limitations or exclusions on coverage not

contained in their insurance policies.”].)

Finally, we find no reason to infer the Legislature intended section 11580.2,

subdivision (c)(2) to apply in this situation. (Interinsurance Exchange v. Marquez

(1981) 116 Cal.App.3d 652, 656 [“In interpreting the statute then it must be given

a reasonable construction according to the Legislature‟s real or apparent intention.

[Citation.]”].) As previously noted, section 11580.2, subdivision (c)(2) was

partially designed to prevent double recovery. (California State Auto. Assn. Inter-

Ins. Bureau v. Huddleston, supra, 68 Cal.App.3d at p. 1068.) Here, there is no

double recovery. In addition, although section 11580.2, subdivision (c)(2) does not

expressly require that it be included in an automobile insurance policy in order to

apply, neither does it prohibit an insurer from forfeiting the statutory exclusion.

(See Utah Property, supra, 230 Cal.App.3d at p. 1019 [“We have been cited no

California case, nor are we aware of any, holding that statutory provisions may be

incorporated in an insurance policy so as to limit coverage otherwise provided by

the policy.”].) CSAA provided more than the minimally required UIM coverage.

It elected to incorporate certain statutory exclusions, but not the one set forth in

section 11580.2, subdivision (c)(2). Having chosen not to include such

exclusionary language, it cannot now invoke the statutory exclusion.

Absent the statutory exclusion set forth in section 11580.2, subdivision

(c)(2), both the CSAA and Progressive policies are implicated. Although the

CSAA policy‟s “Other Insurance” clause contains an excess coverage provision,

CSAA may not rely on that provision because the Progressive policy has a pro-rata

provision. As explained above, under section 11580.2, subdivision (d), the pro-

rata provision in the Progressive policy takes precedence over the excess coverage

provision in the CSAA policy. (See Prieto, supra, 268 Cal.App.4th at pp. 893-894

[insurance policy containing the pro-rata provision permitted by section 11580.2,

subdivision (d) takes precedence over an insurance policy providing that it is

excess coverage]; Planet, supra, 23 Cal.App.4th at p. 1262 [same].) Thus, the

UIM loss must be allocated on a pro-rata basis between Progressive and CSAA.

DISPOSITION

The judgment is affirmed. Costs are awarded to respondent.

CERTIFIED FOR PUBLICATION.

MANELLA, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.