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Automobile Cases Liberty Mutual Fire Insurance v. Michael McKenzie (2001) B138295 Vargas v. Athena Assurance Co. (2002) B146008 - PROP 213 CIVIL CODE 3333.4/AUTOMOBILE COVERAGE Division One of the Second Appellate District (Los Angeles) held that Proposition 213/Civil Code §3333.4 (an uninsured and/or unlicensed driver cannot recover non-economic damages arising out of a traffic accident) does not bar the survivors of a child killed in a helicopter crash while being transported from the scene of an accident in which she was the passenger of a car driven by an unlicensed, uninsured driver from recovering from the owners of the helicopter. It does bar them from recovering non-economic damages from the owners of the other vehicles involved in the accident. Holding Because the City of Los Angeles negligently inspected, serviced, maintained, equipped, and operated the helicopter, none of which are [real] property-related theories of liability related to the City's roads and highways. Just as a products liability claim against the manufacturer of the vehicle involved in an accident lacks the "necessary connection" between the uninsured motorist's injury and his operation or use of the vehicle, so too does Plaintiffs' claim against the City as the owner and operator of the helicopter lack the "necessary connection" between Plaintiffs' injury and Plaintiffs' operation and use of the vehicle that collided with the sanitation truck. Relevant Portions of §3333.4 3333.4 provides: "(a) [I]n any action to recover damages arising out of the operation or use of a motor vehicle, a person shall not recover non-economic losses to compensate for pain, suffering, inconvenience, physical impairment, disfigurement, and other nonpecuniary damages if . . . [¶] . . . [¶] (2) The injured person was the owner of a vehicle involved in the accident and the vehicle was not insured as required by the . . . laws of this state [or] [¶] (3) The injured person was the operator of a vehicle involved in the accident and the operator can not establish his or her financial responsibility as required by the . . . laws of this state. . . ." Facts Norma Vides was a passenger in a car driven by Pedro Anaya, an unlicensed uninsured motorist. Anaya collided with a sanitation truck owned by the City of Los Angeles. Vides was injured, and was being helicoptered to a hospital when the helicopter owned by the City of Los Angeles crashed, killing all on board. Vides’ mother, Genoava Anaya, sued the City of Los Angeles. The full text of the decision can be viewed at http://www.courtinfo.ca.gov/opinions/documents/B152460.DOC. Liberty Mutual Fire Insurance v. Michael McKenzie (2001) B138295 Claims Professionals Cannot be Sued for Either Breach of Contract or Breach of the Implied Covenant of Good Faith; Discusses Ownership of Vehicle Not Registered to Policyholder This decision by the Second Appellate District Division Four (Los Angeles) has two key holdings. First, it discusses when someone owns a vehicle for purposes of obtaining policy benefits for the theft of a vehicle and its contents, when the vehicle was not registered to the policyholder. The second part of the decision affirms two 1976 cases, Austero v. National Casualty Co. of Detroit (1976) 62 Cal.App.3d 511 and Iverson v. Superior Court (1976) 57 Cal.App.3d 157, finding, "as a matter of law an insurance employee such as [the claims professional] cannot be sued for either breach of contract or breach of the implied covenant of good faith." This decision is helpful because both decisions have been overruled in part and distinguished by subsequent decisions, but not on the point of law that a claims professional cannot be sued for breach of contract or breach of the implied covenant of good faith. (For your information, the attorney that would not dismiss the action against the claims professional was Richard Wideman.) Austero v. National Casualty Co. of Detroit (1976) 62 Cal.App.3d 511 held that the spouse of a disability policy holder cannot sue the insurer for breach of contract and breach of the implied covenant of good faith, because the spouse did not have a contractual relationship with the insurer. Austero held that the right to claim breach of contract and breach of the implied covenant of good faith is limited to the policy holder and possibly, to an express beneficiary of the policy. Austero also held that the employee [claims professional] of an insurance company, acting in the course and scope of employment, is not a party to the insurance contract and therefore cannot be held liable for tortious breach of the implied covenant of good faith and fair dealing. Austero has been cited thirty times since 1976, mostly for the proposition that a third party to the insuring agreement does not have standing to sue for breach of contract and breach of the implied covenant of good faith. Iverson v. Superior Court (1976) 57 Cal.App.3d 157 held that a claims supervisor employed by Insurance Company of North America was not liable for breach of the implied covenant of good faith for not accepting a settlement demand within policy limits. Both cases were cited in Wilson v. Household Finance (1982) 131 Cal.App.3d 649 for the proposition that the seller of credit insurance, that was also the beneficiary of the policy, could be sued for breach of the implied covenant of good faith and fair dealing. Egan v. Mutual of Omaha Ins. Co. (1979) cited both cases, and stands for the proposition that a claims professionals handling of a claim is imputed to the employer. However, Egan disapproved Austero in part, for reasons unrelated to the claims professional employment issue. Vargas v. Athena Assurance Co. (2002) B146008 - PROP 213 CIVIL CODE 3333.4/AUTOMOBILE COVERAGE Cases involving injuries to uninsured drivers are often still referred to as “Prop 213” cases. In 1996, California Voters voted yes on Proposition 213, which enacted Civil Code Section 3333.4. That prevents an uninsured or drunk driver from recovering non-economic damages (like pain and suffering) if the driver is involved in an automobile accident. There have been a series of cases carving out exceptions to this statute, but in this case, Division Two of the Second Appellate District (Los Angeles) declined to carve out another exception: that of someone injured while driving an uninsured personally-owned vehicle for business purposes. The employer’s policy, issued by Athena, had “permitted user” coverage, but that coverage applied to a vehicle owned by the employer. The policy also specifically excluded coverage for employees using their own cars. Comment on the Application of this Case: Although it came up in the context of a Proposition 213 case, which means the driver won’t be able to recover a lot of the underlying judgment, I think that it can apply broadly to any situation which an employee is using a personal vehicle that is not insured. Be careful, though, that the policy language is in accord with the decision. The definition of “permitted user” and the exclusionary language can be viewed in the full text of this decision at http://www.courtinfo.ca.gov/opinions/documents/B146008.PDF.
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