Judge: Christian R. Gullon, Case: 23PSCV03072, Date: 2024-07-02 Tentative Ruling
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Case Number: 23PSCV03072 Hearing Date: July 2, 2024 Dept: O
Tentative Ruling
PETITIONERS ALFONSO ESPINOZA AND PEDRO SALAZAR’S NOTICE
OF MOTION AND MOTION FOR AN ORDER COMPELLING ARBITRATION is MOOT (as
Philadelphia does not dispute arbitration will occur), or, in the
alternative, the motion is DENIED (as Philadelphia is
statutorily entitled to a stay pending calculation concerning what worker’s
compensation would have paid for Petitioners’ treatment; see Case v. State
Farm, infra).
Background
This case arises from a motor vehicle accident that occurred
on 8/22/2019. Petitioners, while in the scope of their employment with Forest
Lawn Memorial Services, were involved in a motor vehicle collision where a
third-party driver was at fault. Petitioners settled their matter with the
third-party’s insurance company. However, because the third party was
underinsured, Petitioners now pursue a claim against Respondent in an
underinsured motorist claim. (Motion p. 2.) Neither Petitioner has a pending
worker’s compensation claim.
On October 4, 2023, Plaintiffs/Petitioners ALFONSO ESPINOZA
and PEDRO SALAZAR filed a ‘COMPLAINT (PETITION TO OPEN A CIVIL CASE AND TO
ASSIGN A CASE NUMBER BY PETITIONERS ALFONSO ESPINOZA AND PEDRO SALAZAR)’
against Defendant/Respondent PHILADELPHIA INSURANCE COMPANY. According to the
complaint, as an arbitrator does not have power to rule on discovery matters
arising in an uninsured motorist arbitration, Petitioners sought the superior
court to hear and rule on discovery.
On March 11, 2024, the court issued the following minute
order re: Order to Show Cause Re: Failure to File Proof of Service; Case
Management Conference: “Defense Counsel informs the Court that the parties are
set to attend Arbitration in June or July of 2024. In light of the above, the
Court Orders the matter set as follows: On the Court's own motion, the Case
Management Conference scheduled for 03/11/2024 is continued to 08/12/2024 at
09:00 AM in Department O at Pomona Courthouse South. Post-Arbitration Status
Conference is scheduled for 08/12/2024 at 09:00 AM in Department O at Pomona
Courthouse South. The case
is ordered STAYED PENDING BINDING ARBITRATION as to the entire action.”
(capitalization added.)
On May 22, 2024, Petitioners filed the instant motion.
On June 18, 2024, Respondent filed its opposition.
On June 25, 2024, Petitioners filed their reply.
Discussion
Petitioners seek an “Order compelling arbitration of said
dispute, and any other existing dispute under the said written agreement, for
an Order appointing a neutral arbitrator, and for such other and further relief
as the Court deems just and proper.” (Motion p. 5:5-8.)
1.
Whether the Matter Should be Arbitrated?
Brief answer: Moot.
The crux of the motion is dedicated to Respondent’s “bad
faith” in failing to arbitrate the matter. (See e.g., Motion p. 5:3-7
[“However, Respondent still refuses to take any steps in order to submit the
dispute to arbitration; see also Motion p. 4:5-6 [“Respondent still refuses to
take any steps in order to submit the dispute to arbitration.”].)
However, Respondents are not disputing the matter is
to be arbitrated. “Respondent
has agreed to arbitrate and agreed to set an arbitration date. Given
that the parties have chosen an arbitrator and Respondent agreed to set a date,
there is nothing for this Court to compel. The only thing that is left is for
the parties to agree to and set an arbitration date.” (Opp. p. 7-8; see also
Opp. p. 3:3-4 [“To the contrary of Petitioners’ moving papers and belief,
Respondent, Philadelphia Insurance Company, has not rescinded its agreement to
arbitrate.”]; see also Opp. p. 3:12-13 [“Respondent [did not] state that
Respondent is no longer arbitrating this matter or rescinding its agreement to
arbitrate.”]; see also Opp. p. 5:26-28 [“There was no run around just asking
you to provide [what was] necessary to properly evaluate the case and to date
the information still has not been provided.”].)
Thus, as to the relief to compel arbitration, that issue
is MOOT because Respondent is not seeking to rescind the agreement to
arbitrate.
Notwithstanding,
what appears to be in controversy is WHEN arbitration can take
place.
2.
Whether Insurance Code Section 115802’s
Conditions Must be Met Before Arbitration Can Occur? Brief Answer: Yes.
According to Respondent, pursuant to Insurance Code section
115802, arbitration cannot take place until after there is a
determination of certain issues such as Respondent’s (i) right to request a
determination that Claimants’ condition is permanent and stationary; (ii) right
to raise compliance issues with arbitration demand conditions; (iii) right to
request a determination of what Claimants’ past and future medical expense would
have been paid through work compensation and right to a reduction in Claimants’
liened medical treatment to the determinable medical expenses that would have
otherwise been paid by work compensation. (Opp. p. 7:12-17.) The following
timeline between the attorneys best summarizes the dispute (Opp. pp. 4-6):
On or around January 25, 2022,
Philadelphia informed Petitioners’ counsel that “…in the State of California,
the UM/UIM carrier is not responsible for any element of loss if a person is
entitled to receive payment for the same element of loss under any workers
compensation.” (Declaration of Linh T. Cao “Cao Decl.” ¶ 3; Exhibit K.)
On or around February 7, 2023,
Petitioners made a settlement demand. (Cao Decl. ¶ 4.)
On or around March 1, 2023,
Respondent’s counsel, Linh T. Cao, spoke with Petitioners’ counsel, Shannon
Popovich, over the phone and memorialized the conversation in email. Ms. Cao’s
email reiterated to Petitioners that “there is insufficient information to
reasonably evaluate your clients’ settlement demand.
On March 8, 2023, March 22,
2023, and April 7, 2023, and on other dates Ms. Cao followed up on
the additional information and extension.
On November 14, 2023, Ms. Cao
requested a status of Petitioners’ worker’s compensation claims as “arbitration
is premature for this UM case until the workers comp cases have resolved for
each of them. (See California Insurance Code Section 11580.2.)” (Cao Decl. ¶
14, Exhibit M.)
In February 2024, Petitioners’
depositions were taken.
On February 27, 2024,
Petitioners sent a policy limits demand.
On April 16, 2024, [Respondent’s
Counsel Cao] sent a response letter to [Petitioners’ Counsel Ms. Belty] stating
in sum that “Based on [Claimants’] decision against seeking medical treatment
through work comp, and
pursuant to the express terms and provisions of the subject UM policy
endorsement, Philadelphia is entitled to a reduction in claimants’ liened
medical treatment to the determinable medical expenses that would have
otherwise been paid by work comp. This is the case regardless of whether
claimants submitted a work comp claim for those benefits or not.”
Thus, “given that claimants were undeniably eligible for treatment through the
workers’ compensation system, Philadelphia is entitled to a reduction in his
non-comp/lien based medical treatment to that amount determinable for payment
by work comp…Philadelphia is also entitled to a determination regarding to what
extent claimants’ past and future medical expense would have been paid through
work comp, before paying or arbitrating [their underinsured] motorist claim[s].
(Cao Decl. ¶ 18, Exhibit A [emphasis added].)
On May 22, 2024, Petitioners
filed this Motion, and in a correspondence indicated that Respondent has
“waived [its] right to bring up the these issues at this point” and that
Petitioners will proceed with their Motion and “let the Court determine whether
your position that you can ask for a stay later on is reasonable.” (Cao Decl.
¶21.)
Effectively,
the issue presented is whether Respondent waived its right to bring up issues
related to arbitration. For reasons to be discussed below, the court does not
find waiver because the express language in the limitations of the Insurance
Code and Philadelphia’s policy supports a determination that Philadelphia is
entitled to a reduction in their non-comp/lien based medical treatment to that
amount determinable for payment by worker’s compensation, a point that
Philadelphia has been making for nearly two years, which undermine any notions
of waiver.
California Insurance Code Section 11580.2 addresses
uninsured motorist endorsement or coverage. Section 11580.2(f) discusses
arbitration of such claims, and states as follows in relevant part:
(f) The policy or an endorsement added
thereto shall provide that the determination as to whether the insured shall be
legally entitled to recover damages, and if so entitled, the amount thereof,
shall be made by agreement between the insured and the insurer or, in the event
of disagreement, by arbitration. The arbitration shall be conducted by a single
neutral arbitrator. An award or a judgment confirming an award shall not be
conclusive on any party in any action or proceeding between (i) the insured,
his or her insurer, his or her legal representative, or his or her heirs and
(ii) the uninsured motorist to recover damages arising out of the accident upon
which the award is based. If
the insured HAS OR MAY HAVE RIGHTS TO BENEFITS, other than nonoccupational
disability benefits, UNDER any WORKERS’ COMPENSATION law, the arbitrator shall
NOT PROCCED WITH ARBITRATION until the insured's physical condition is
stationary and ratable. In those cases, in which the insured claims a
permanent disability, the claims shall, unless good cause be shown, be
adjudicated by award or settled by compromise and release before the
arbitration may proceed. Any demand or petition for arbitration shall contain a
declaration, under penalty of perjury, stating whether (i) the insured has a
workers' compensation claim; (ii) the claim has proceeded to findings and award
or settlement on all issues reasonably contemplated to be determined in that
claim; and (iii) if not, what reasons amounting to good cause are grounds for
the arbitration to proceed immediately….” (capitalization added.)
Accordingly,
the statute includes
two provisions to prevent a double recovery from UM benefits and workers'
compensation benefits for the same injury: (1) Insurance Code § 11580.2(h) authorizes
insurers to include in auto policies clauses mandating the reduction of UM
benefits to reflect workers' compensation benefits, (2) Insurance Code § 11580.2(f) also
imposes a stay of arbitration regarding
UM benefits disputes until specified circumstances occur relating to a workers'
compensation claim. (See Opp. p. 10, citing Rangel v. Interinsurance
Exchange, (1992), 4 Cal.4th 1,8; see also Motion p. 11, citing Case v.
State Farm Mutual Automobile Ins. Co., Inc. (2018) 30 Cal.App.5th 397
[discussing Rangel. Rangel approves an insurer not going to
arbitration and delaying paying benefits until workers' compensation benefits
are determined.]
Consequently, based upon the
statute, an insurer acts properly in delaying payment of UM benefits including
benefits for non- economic loss until medical expense amounts are determined
through the workers' compensation system. This is because the UM insurer is
liable only for the “excess” if any, of the policy benefits over the workers'
compensation benefits, that is, the difference between the policy limits and
the applicable workers' compensation benefits. (Case, supra, 30
Cal.App.5th at p. 413.)
Petitioners seemingly argue
that the statute is immaterial because double recovery, which is the legislative
purpose underscoring the statute (Rangel, supra, 4 Cal.4th at p. 9) is
not at issue as the there was no workers’ compensation claim. (See Opp. p.
5:5-7 [“There is no danger of double recovery in the instant case as
there was never an award made from the Workers’ compensation system.”].) But Case court found that
the petitioner’s policy required that the loss payable be reduced by the
determinable medical expenses eligible for payment through the workers’
compensation system, REGARDLESS of whether the petitioner submitted a claim for
such benefits. (Case, supra, 30 Cal.App.5th at 413.) In
Reply, Petitioners attempt to distinguish from Case on the grounds that
the “central issue was determining whether or not State Farm Insurance had
committed bad faith in their delay of paying UM benefit.” (Reply p. 4:12-13.)
Not so. There are two issues in Case.[1]
The first issue starts at p. 411 of the opinion in the section entitled
‘1. Loss-payable-reduction
Policy Provision.’ This discussion section makes no
reference to bad faith in determining the “only one
reasonable interpretation, namely, that the provision applied to medical
expenses eligible for payment as
workers’ compensation benefits” regardless
of whether a case was submitted. The second issue is found starting on p. 413
in the section entitled ‘No Triable Issues Regarding Bad
Faith.’ Therefore,
Plaintiffs’ interpretation that the case “only” stood for “whether [State
Farm’s] delay in paying the claim was reasonable” is unsupported by the
opinion.
To the extent that Petitioners
argue that this court does not have the authority to determine what
Workers’ Compensation would have paid (Reply pp. 4-5), that may very well be
true, but the court is not here to make that monetary determination. The
ultimate issue presented is whether Philadelphia is entitled to a determination
to what extent Petitioners’ past and future medical expense would have been
paid through work compensation before proceeding with arbitration. And based on
the foregoing policy, case law, and statute(s), the answer is in the
affirmative.
Conclusion
Based on the foregoing,
Petitioners’ motion is MOOT or, in the alternative, is DENIED.