Filed 10/28/13 McAlister v. Mercury Ins. Co. CA2 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
HARVARD Y. MCALISTER, JR. et al., B242537
Plaintiffs and Appellants, (Los Angeles County Super. Ct. No. BC472479) v.
MERCURY INSURANCE COMPANY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County,
William F. Highberger, Judge. Affirmed.
Law Office of Jonathan Weiss, Jonathan Weiss; Law Office of
Steven W. O‟Reilly and Steven W. O‟Reilly for Plaintiffs and Appellants.
Barger & Wolen, Steven H. Weinstein, Spencer Y. Kook and Munish Dayal
for Defendant and Respondent.
__________________________________ Plaintiffs and appellants Harvard Y. McAlister, Jr. and Ramona L. McAlister
(plaintiffs) appeal a judgment in favor of defendant and respondent Mercury Insurance
Company (Mercury) following the sustaining of Mercury‟s demurrer to the original
complaint without leave to amend.
The essential issue presented is whether plaintiffs‟ action against Mercury is
barred by the auto policy‟s contractual lawsuit limitations (CLL) provision, which bars
lawsuits for breach of the med-pay agreement unless filed within two years of the
accident date.
The pleading on its face shows the action is barred by the two-year CLL provision.
Therefore, the judgment is affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
1. Pleadings
On October 31, 2011, plaintiffs filed suit against Mercury, alleging in
pertinent part:
Plaintiffs purchased a Mercury auto insurance policy, including $5,000 in medical
expense coverage (med-pay), covering the period July 4, 2006 through January 4, 2007.
On December 14, 2006, plaintiffs were involved in an accident while driving their car.
Both were injured and both incurred reasonable and necessary medical expenses within a
year of the accident date. Plaintiffs “reported the accident to Mercury Insurance within
24 hours of its occurrence . . . . ”
2 Nearly three years after the accident, on October 22, 2009, plaintiffs submitted
$5,000 in medical bills to Mercury; $3,000 was incurred in the first year after the
accident and $2,000 was incurred after the one-year period.
In a letter dated October 30, 2009, Mercury denied the claim for med-pay benefits
on the ground the bills were submitted more than two years after the accident. Mercury
cited the following policy language: “ „No suit or action on coverage C shall be
sustainable in any Court of law or equity unless commenced within two years following
the date of accident.‟ ”
Plaintiffs‟ complaint disputed Mercury‟s position, alleging: “The cited language
clearly and unambiguously refers to the time for filing a lawsuit regarding med-pay.
The policy says nothing about the time for mailing or otherwise presenting medical
expenses for payment or reimbursement.”
The complaint also included class action allegations, and pled causes of action for
breach of contract, breach of the implied covenant of good faith and fair dealing, unfair
competition (Bus. & Prof. Code, § 17200 et seq.), and declaratory relief.
2. Mercury’s Demurrer
Mercury demurred, asserting the complaint was barred in its entirety by the two-
year CLL. Specifically, under the policy, Mercury agreed to pay for certain medical
expenses “incurred within one year of the date of the accident” up to $5,000. The policy
further provided: “No suit or action on Coverage C [medical expenses] shall be
sustainable in any court of law or equity unless commenced within two years following
the date of accident.”
3 Here, the lawsuit for med-pay benefits was commenced long after the time
permitted by the policy. The accident occurred on December 14, 2006. Within one year
of the accident, plaintiffs allegedly incurred $3,000 in medical expenses. For unknown
reasons, plaintiffs waited nearly two more years, until October 22, 2009, to submit a
claim for med-pay benefits. After Mercury denied the claim, plaintiffs waited two more
years before commencing the instant lawsuit. In other words, this lawsuit was brought
nearly five years after the accident and nearly three years after the expiration of the
deadline for filing suit to recover med-pay benefits.
3. Plaintiffs’ Opposition
Plaintiffs argued the policy failed to advise them in conspicuous and unequivocal
language as to when to send in their medical bills. Therefore, Mercury‟s denial of
benefits was wrongful and its CLL provision was unenforceable.
Plaintiffs relied on an insurance regulation, 10 California Code of Regulations
section 2695.4 (Regulation 2695.4), which provides in pertinent part: “(a) Every insurer
shall disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or
other provisions of any insurance policy issued by that insurer that may apply to the
claim presented by the claimant. . . . . [¶] . . . [¶] (d) Except where a time limit is
specified in the policy, no insurer shall require a first party claimant under a policy to
give notification of a claim or proof of claim within a specified time.”
Plaintiffs argued Mercury was equitably estopped from asserting the two-year
CLL provision because the policy failed to specify a deadline for submitting a proof of
claim to the insurer. Further, Mercury remained silent despite the “ „affirmative duty to
4 speak‟ ” imposed by the regulations, and therefore was precluded from using the
contractual limitations provision.
4. Trial Court’s Ruling
On May 8, 2012, the matter came on for hearing. The trial court sustained
Mercury‟s demurrer without leave to amend. It found the policy‟s CLL provision, which
barred suit for med-pay benefits unless commenced within two years of the date of the
accident, “is reasonable and thus enforceable, contrary to plaintiffs‟ legal contention.
The Court is satisfied that the policy‟s disclosure of the time limit is quite clear enough
and that there is no basis for the alleged equitable estoppel. Since plaintiffs had not
claimed until after the contractual limitations period had run, there was no occasion for
the carrier to supplement the disclosures in the policy‟s text with further disclosures when
a claim is first presented.”
Plaintiffs filed a timely notice of appeal from the judgment.
CONTENTIONS
Plaintiffs contend: the trial court erred in holding the CLL provision necessarily
barred their claim; Mercury‟s failure to comply with insurance regulations equitably
estops it from relying on the CLL provision; the CLL provision is so unreasonable as to
be unenforceable; the CLL is unconscionable and therefore unenforceable; and if factual
allegations are insufficient, leave to amend should be given.
5 DISCUSSION
1. Standard of Appellate Review
In determining whether a plaintiff has properly stated a claim for relief, “our
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Filed 10/28/13 McAlister v. Mercury Ins. Co. CA2 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
HARVARD Y. MCALISTER, JR. et al., B242537
Plaintiffs and Appellants, (Los Angeles County Super. Ct. No. BC472479) v.
MERCURY INSURANCE COMPANY,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County,
William F. Highberger, Judge. Affirmed.
Law Office of Jonathan Weiss, Jonathan Weiss; Law Office of
Steven W. O‟Reilly and Steven W. O‟Reilly for Plaintiffs and Appellants.
Barger & Wolen, Steven H. Weinstein, Spencer Y. Kook and Munish Dayal
for Defendant and Respondent.
__________________________________ Plaintiffs and appellants Harvard Y. McAlister, Jr. and Ramona L. McAlister
(plaintiffs) appeal a judgment in favor of defendant and respondent Mercury Insurance
Company (Mercury) following the sustaining of Mercury‟s demurrer to the original
complaint without leave to amend.
The essential issue presented is whether plaintiffs‟ action against Mercury is
barred by the auto policy‟s contractual lawsuit limitations (CLL) provision, which bars
lawsuits for breach of the med-pay agreement unless filed within two years of the
accident date.
The pleading on its face shows the action is barred by the two-year CLL provision.
Therefore, the judgment is affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
1. Pleadings
On October 31, 2011, plaintiffs filed suit against Mercury, alleging in
pertinent part:
Plaintiffs purchased a Mercury auto insurance policy, including $5,000 in medical
expense coverage (med-pay), covering the period July 4, 2006 through January 4, 2007.
On December 14, 2006, plaintiffs were involved in an accident while driving their car.
Both were injured and both incurred reasonable and necessary medical expenses within a
year of the accident date. Plaintiffs “reported the accident to Mercury Insurance within
24 hours of its occurrence . . . . ”
2 Nearly three years after the accident, on October 22, 2009, plaintiffs submitted
$5,000 in medical bills to Mercury; $3,000 was incurred in the first year after the
accident and $2,000 was incurred after the one-year period.
In a letter dated October 30, 2009, Mercury denied the claim for med-pay benefits
on the ground the bills were submitted more than two years after the accident. Mercury
cited the following policy language: “ „No suit or action on coverage C shall be
sustainable in any Court of law or equity unless commenced within two years following
the date of accident.‟ ”
Plaintiffs‟ complaint disputed Mercury‟s position, alleging: “The cited language
clearly and unambiguously refers to the time for filing a lawsuit regarding med-pay.
The policy says nothing about the time for mailing or otherwise presenting medical
expenses for payment or reimbursement.”
The complaint also included class action allegations, and pled causes of action for
breach of contract, breach of the implied covenant of good faith and fair dealing, unfair
competition (Bus. & Prof. Code, § 17200 et seq.), and declaratory relief.
2. Mercury’s Demurrer
Mercury demurred, asserting the complaint was barred in its entirety by the two-
year CLL. Specifically, under the policy, Mercury agreed to pay for certain medical
expenses “incurred within one year of the date of the accident” up to $5,000. The policy
further provided: “No suit or action on Coverage C [medical expenses] shall be
sustainable in any court of law or equity unless commenced within two years following
the date of accident.”
3 Here, the lawsuit for med-pay benefits was commenced long after the time
permitted by the policy. The accident occurred on December 14, 2006. Within one year
of the accident, plaintiffs allegedly incurred $3,000 in medical expenses. For unknown
reasons, plaintiffs waited nearly two more years, until October 22, 2009, to submit a
claim for med-pay benefits. After Mercury denied the claim, plaintiffs waited two more
years before commencing the instant lawsuit. In other words, this lawsuit was brought
nearly five years after the accident and nearly three years after the expiration of the
deadline for filing suit to recover med-pay benefits.
3. Plaintiffs’ Opposition
Plaintiffs argued the policy failed to advise them in conspicuous and unequivocal
language as to when to send in their medical bills. Therefore, Mercury‟s denial of
benefits was wrongful and its CLL provision was unenforceable.
Plaintiffs relied on an insurance regulation, 10 California Code of Regulations
section 2695.4 (Regulation 2695.4), which provides in pertinent part: “(a) Every insurer
shall disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or
other provisions of any insurance policy issued by that insurer that may apply to the
claim presented by the claimant. . . . . [¶] . . . [¶] (d) Except where a time limit is
specified in the policy, no insurer shall require a first party claimant under a policy to
give notification of a claim or proof of claim within a specified time.”
Plaintiffs argued Mercury was equitably estopped from asserting the two-year
CLL provision because the policy failed to specify a deadline for submitting a proof of
claim to the insurer. Further, Mercury remained silent despite the “ „affirmative duty to
4 speak‟ ” imposed by the regulations, and therefore was precluded from using the
contractual limitations provision.
4. Trial Court’s Ruling
On May 8, 2012, the matter came on for hearing. The trial court sustained
Mercury‟s demurrer without leave to amend. It found the policy‟s CLL provision, which
barred suit for med-pay benefits unless commenced within two years of the date of the
accident, “is reasonable and thus enforceable, contrary to plaintiffs‟ legal contention.
The Court is satisfied that the policy‟s disclosure of the time limit is quite clear enough
and that there is no basis for the alleged equitable estoppel. Since plaintiffs had not
claimed until after the contractual limitations period had run, there was no occasion for
the carrier to supplement the disclosures in the policy‟s text with further disclosures when
a claim is first presented.”
Plaintiffs filed a timely notice of appeal from the judgment.
CONTENTIONS
Plaintiffs contend: the trial court erred in holding the CLL provision necessarily
barred their claim; Mercury‟s failure to comply with insurance regulations equitably
estops it from relying on the CLL provision; the CLL provision is so unreasonable as to
be unenforceable; the CLL is unconscionable and therefore unenforceable; and if factual
allegations are insufficient, leave to amend should be given.
5 DISCUSSION
1. Standard of Appellate Review
In determining whether a plaintiff has properly stated a claim for relief, “our
standard of review is clear: „ “We treat the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions or conclusions of fact or law.
[Citation.] We also consider matters which may be judicially noticed.” [Citation.]
Further, we give the complaint a reasonable interpretation, reading it as a whole and its
parts in their context. [Citation.] When a demurrer is sustained, we determine whether
the complaint states facts sufficient to constitute a cause of action. [Citation.] And when
it is sustained without leave to amend, we decide whether there is a reasonable possibility
that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we affirm.
[Citations.] The burden of proving such reasonable possibility is squarely on the
plaintiff.‟ [Citations.]” (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126,
italics added.) Our review is de novo. (Ibid.)
2. Trial Court Properly Sustained Demurrer Without Leave to Amend Because Plaintiffs Failed to File Suit to Recover Med-pay Benefits “Within Two Years Following the Date of Accident,” As Required by the Policy
a. Plaintiffs reliance on Regulation 2695.4 is misplaced; until such time as a claim is presented, the duty to notify the claimant of applicable time limits is not triggered
Plaintiffs contend Regulation 2695.4 required Mercury to give notice of the proof
of claim deadline before enforcing it, and because Mercury did not disclose a proof of
6 claim limitation period, it is barred from enforcing the proof of claim deadline. As
explained below, the argument is unavailing.
To reiterate, Regulation 2695.4 states in pertinent part: “(a) Every insurer shall
disclose to a first party claimant or beneficiary, all benefits, coverage, time limits or other
provisions of any insurance policy issued by that insurer that may apply to the claim
presented by the claimant.” (Italics added.)
Plaintiffs characterize their notification to Mercury, within 24 hours of the
accident, that they had been involved in an accident, as a “claim,” so as to trigger
Regulation 2695.4‟s duty on the part of the insurer to disclose to a claimant all time limits
that may apply to the claim presented by the claimant. Thus, the discrete issue presented
is whether the plaintiffs‟ initial notification to Mercury that they had been involved in an
accident constituted a “claim.”
In “both its ordinary meaning and in the interpretation given to it by other courts
in similar circumstances, a claim is a demand for something as a right or as
due. . . . A claim is the assertion of a liability of the party, demanding that the party
perform some service or pay some money. [Citation.] A claim is a demand or challenge
of something as a right and asserts the liability of the party from whom a service or sum
of money is requested. [Citation.]” (Abifadel v. Cigna Ins. Co. (1992) 8 Cal.App.4th
145, 160.)
Clearly, plaintiffs‟ notification to Mercury, within 24 hours of the accident, that
they had been involved in an accident, fell far short of a “claim.” Therefore, Mercury at
7 that juncture was not required by Regulation 2695.4 to advise the plaintiffs of any
applicable time limits.
b. Action is barred on its face by plaintiffs’ failure to file suit within two years of the accident
As indicated, the date of the accident was December 14, 2006. The complaint
discloses it was not until October 22, 2009, that plaintiffs submitted their medical bills to
Mercury. The CLL provision in the policy unambiguously states: “No suit or action on
Coverage C [expenses for medical services] shall be sustainable in any court of law or
equity unless commenced within two years following the date of accident.” (Italics
added.) Plaintiffs commenced this action on October 31, 2011, nearly five years after the
date of the accident.
In an attempt to overcome the two year CLL provision, plaintiffs argue said
limitations provision is unreasonable, shows imposition or undue advantage, is
unconscionable, and therefore is unenforceable.
Case law is to the contrary. For example, CBS Broadcasting Inc. v. Fireman’s
Fund Ins. Co. (1999) 70 Cal.App.4th 1075, found there was “nothing inherently
unreasonable” about a one-year contractual limitations period (id. at p. 1084) which was
clearly and conspicuously set forth in the policy. (Id. at p. 1086.)
Contractual limitations periods have “long been recognized as valid in California.
As is stated in Fageol T. & C. Co. v. Pacific Indemnity Co. (1941) 18 Cal.2d 748, 753
[117 P.2d 669], of a policy provision requesting action to be commenced within
12 months after the happening of the loss: „Such a covenant shortening the period of
8 limitations is a valid provision of an insurance contract and cannot be ignored with
impunity as long as the limitation is not so unreasonable as to show imposition or undue
advantage. One year was not an unfair period of limitation. [Citations.]‟ [Citations.]
We accordingly hold that the shortened time-for-commencement-of-suit provision in the
policies in question is valid and governs the time within which suit has to be commenced
in this case.” (C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055,
1064.)
Given that case law has upheld the validity of a one-year contractual limitations
period, the instant two-year CLL provision is clearly enforceable. Because plaintiffs
failed to file suit within two years of the accident, the action is barred.
c. No Basis for Leave to Amend
Plaintiffs contend that in the event their factual allegations are insufficient, they
should be granted leave to amend. The burden of showing a reasonable possibility that
the pleading could be amended “is squarely on the plaintiff.” (Zelig v. County of Los
Angeles, supra, 27 Cal.4th at p. 1126.) Here, plaintiffs do not specify in what manner
they could amend their pleading to state a cause of action. Therefore, leave to amend is
not warranted.
9 DISPOSITION
The judgment is affirmed. The parties shall bear their respective costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
KLEIN, P. J.
WE CONCUR:
CROSKEY, J.
ALDRICH, J.