Judge Kerry Bensinger, Case Number: 22STCV26277, Date: 2023-10-18 Tentative Ruling

On August 12, 2022, Plaintiff, Gregory Dellio, initiated this action against Defendant, Geico General Insurance Company, for (1) Breach of Insurance Contract, (2) Bad Faith Breach of Implied Covenant of Good Faith and Fair Dealing, and (3) Declaratory relief. Plaintiff alleges that he retained an insurance policy from Defendant with Policy Number 4223-60-93-65 (the “Policy”) which provided uninsured motorist coverage for bodily injury claims. On August 12, 2020, Plaintiff was driving his vehicle on the freeway when Plaintiff’s vehicle was struck by a bicyclist attempting to cross the freeway. The bicyclist was riding a Los Angeles Metropolitan Transportation Authority (“Metro”) electric bicycle at the time of the incident. As a result, Plaintiff suffered injury and sought treatment.

Plaintiff’s insurance policy was in effect at the time of the incident. Pursuant to that Policy and the procedures provided therein, Plaintiff informed Defendant of the incident and initiated an uninsured motorist bodily injury claim. Defendant rejected the claim, giving rise to this action.

On June 16, 2023, Defendant filed this Demurrer to Plaintiff’s Complaint. Defendant opposed and Plaintiff replied.

The demurrer was heard on July 25, 2023. Based on oral argument, the Court continued the hearing for further briefing on whether an electric bicycle is a motor vehicle within the meaning of the Vehicle Code and Insurance Code.

A demurrer tests the legal sufficiency of the pleadings and will be sustained only where the pleading is defective on its face. (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) “We treat the demurrer as admitting all material facts properly pleaded but not contentions, deductions or conclusions of fact or law. We accept the factual allegations of the complaint as true and also consider matters which may be judicially noticed. [Citation.]” (Mitchell v. California Department of Public Health (2016) 1 Cal.App.5th 1000, 1007; Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Allegations are to be liberally construed. (Code Civ. Proc., § 452.) In construing the allegations, the court is to give effect to specific factual allegations that may modify or limit inconsistent general or conclusory allegations. (Financial Corporation of America v. Wilburn (1987) 189 Cal.App.3rd 764, 769.)

A demurrer may be brought if insufficient facts are stated to support the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e).) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Where the complaint contains substantial factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty will be overruled or plaintiff will be given leave to amend. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

Defendant requests that the Court take judicial notice of the Policy between Plaintiff and Defendant with policy number 4223-60-83-65. (Request for Judicial Notice (RJN) 1.) The Policy is referenced in the Complaint.

Plaintiff objects to the request, arguing that it has properly pled the legal effect of the Policy and was not required to attach the entire Policy to the Complaint. As such, the entire Policy is not at issue and the Court is therefore limited to the allegations in the Complaint. The Court agrees. Although the court may judicially notice a variety of matters, an insurance policy is not one of them. (See Evid. Code, §§ 450 – 452; Travelers Indemnity Co. of Connecticut v. Navigators Specialty Ins. Co. (2021) 70 Cal.App.5th 341, 354-355 (Travelers Indemnity.)

In Travelers Indemnity, the appellate court addressed the question whether the “trial court should have taken judicial notice of the relevant insurance policies and should have sustained the demurrer based on the content of those policies.” (Travelers Indemnity, 70 Cal.App.5th at pp. 354-355.) The appellate court considered the application of Evidence Code sections 451 and 452 (h) and stated:

In the absence of any specific reference to any statutory subdivision in sections 451 or 452 of the Evidence Code, we infer that Mt. Hawley may have intended to seek judicial notice under Evidence Code section 452, subdivision (h), which permits a court to take judicial notice of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” However, case law holds that “the existence of a contract between private parties cannot be established by judicial notice under Evidence Code section 452, subdivision (h).” (Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145, 37 Cal.Rptr.2d 718.) The existence and terms of a private agreement are not facts that are not reasonably subject to dispute and that can be determined by indisputable accuracy. For that reason, when a party opposes the court's consideration of an insurance policy in the context of a demurrer, it is proper for the court to decline to consider the content of the policy. (See Pastoria v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1495, fn. 4, 6 Cal.Rptr.3d 148 [the court would not take judicial notice of an insurance policy when the authenticity of the document was disputed and plaintiffs did not agree that the court could consider it]; Fiorito v. Superior Court (1990) 226 Cal.App.3d 433, 438, 277 Cal.Rptr. 27 [the trial court erred in considering “ ‘reconstructed’ ” insurance policies attached to an unverified complaint when the defendants generally denied all the allegations of the complaint because “[a] demurrer is not the proper vehicle for determining the truth of disputed facts”].) Here, Travelers strenuously objected to the trial court's consideration of the insurance policies that were the subject of Mt. Hawley's request for judicial notice.

We therefore conclude that there was no basis in Evidence Code sections 451 or 452 for the trial court to have taken judicial notice of the insurance policies identified by Mt. Hawley. As the insurance policies were not properly before the trial court, and accordingly are not properly before us, we do not consider any of Mt. Hawley’s appellate arguments that depend on the content of those documents.

Defense counsel has satisfied the meet and confer requirement. (See Declaration of Jordan S. Derringer, ¶ 3; Code Civ. Proc., § 430.41, subd. (a).)

The sole issue to be decided is whether an electric bicycle (“e-bike”) is a motor vehicle within the meaning of the insurance policy between Plaintiff and Defendant. After consideration of the filings in connection with this Demurrer, including the parties’ supplemental briefing, the Court finds the subject insurance policy does not unequivocally define a motor vehicle to the exclusion of an e-bike. For this reason, the Court construes the insurance policy against Defendant and overrules this Demurrer.

“While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.”¿ (Powerine Oil Co., Inc. v. Superior Court (2005) 37 Cal.4th 377, 390 (Powerine Oil);¿Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.)¿ “[The] goal in construing insurance contracts, as with contracts generally, is to give effect to the parties’ mutual intentions.” (Minkler v. Safeco Ins. Co. of Am. (2010) 49 Cal.4th 315, 321;¿see Powerine Oil, 37 Cal.4th at p. 390.) ¿The parties’ mutual intentions are to be inferred, if possible, solely from the written provisions of the contract. (Ameron Internat. Corp. v. Insurance Co. of the State of Penn. (2010) 50 Cal.4th 1370, 1378 (Ameron);¿Powerine Oil, 37 Cal.4th at p. 390.)¿

“If contractual language is clear and explicit, it governs.” (Minkler, 49 Cal.4th at p. 321;¿ Powerine Oil, 37 Cal.4th at p. 390.)¿ “[P]olicy language is interpreted in its ordinary and popular sense and as a layman would read it and not as it might be analyzed by an attorney or an insurance agent.”¿ (E.M.M.I, Inc. v. Zurich Am. Ins. Co. (2004) 32 Cal.4th 465, 471.)¿ Language in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract.¿(Powerine Oil, 37 Cal.4th at pp. 390-91;¿Bank of the West, 2 Cal.4th at p. 1265.)¿¿

“If the terms are ambiguous . . .¿[courts] interpret them to protect the objectively reasonable expectations of the insured.” (Minkler, 49 Cal.4th at p. 321;¿Bank of the West, 2 Cal.4th at p. 1265.) ¿“A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable.”¿ (Powerine Oil, 37 Cal.4th at p. 390;¿see¿ Ameron, 50 Cal.4th at p. 1378.) The mere fact that a term is not defined in the policy does not necessarily make the term ambiguous. (Powerine Oil, 37 Cal.4th at p. 390.) This is also expressed as interpreting “the provisions in the way the insurer believed the insured understood them at the time the policy was purchased.”¿ (Ameron, 50 Cal.4th at p. 1378;¿Safeco Ins. Co. v. Robert S. (2001) 26 Cal.4th 758, 762.)

“If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insured’s reasonable expectation of coverage.”¿ (Powerine Oil, 37 Cal.4th at p. 391;¿La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co. (1994) 9 Cal.4th 27, 37;¿see¿Minkler, 49 Cal.4th at p. 321.)

In the Complaint, Plaintiff sets forth the definition of “uninsured motor vehicle” under Policy as follows:

b. a motor vehicle owned or operated by a self-insurer within the meaning of any motor vehicle financial responsibility law, motor carrier law or any similar law;

c. a motor vehicle owned by the United States of America, any other national government, a state, or a political sub-division of any such government or its agencies;

d. a land motor vehicle or trailer while located for use as a residence or premises and not as a vehicle;

e. any equipment or vehicle designed or modified for use primarily off public roads, except while actually upon public roads; or

f. any motor vehicle owned or operated by the named insured or any resident of your household.”

The Complaint further alleges that Defendant’s “bicycle does not fall within the exclusions of subsection (e) as it is an equipment for use primarily on public roads and therefore is afforded coverage under the Policy’s uninsured motor vehicle.” (Complaint, ¶ 29.)

Plaintiff is correct that an e-bike does not fit into any of the six categories of vehicles excluded under the Policy’s definition of “uninsured motor vehicles.” The e-bike in question was not an insured auto; it was not owned or operated by a self-insurer; it was not owned by the U.S. government or a state government, or a sub-division or agency of the state of national government; it was not located for use as a residence; it was not “equipment” or “vehicle” designed or modified primarily for use primarily off public roads; nor was it a motor vehicle owned or operated by the named insured (Plaintiff). Importantly, the exclusion in section (e) does not state motor vehicle. It states: vehicle. And while the parties spend much time debating whether the e-bike is a motor vehicle, for purposes of subsection (e), all that is required to be covered by the policy is that the “equipment” or “vehicle” was not designed for use primarily off public roads. Plaintiff alleges the bicycle “is an equipment for use primarily on public roads.” The exclusion does not apply. Neither the Complaint nor Defendant’s demurrer and supplemental brief point to any language in the Policy that further defines “motor vehicle” to exclude an e-bike.[1] Given the absence of any language demonstrating that e-bikes are excluded, the Demurrer cannot prevail.

Moreover, even if the Court were to reach beyond the four corners of the Complaint, which it cannot, and endeavor to address the unidentified and more general language of the Policy, the answer to the question whether an e-bike may be considered a motor vehicle within the meaning of the Policy is not as clear as Defendant claims. First, the complete language of the Policy is not before the Court. Nor is any other language from the Policy included in the Complaint that provides for a definition of motor vehicle. Next, the robust debate between the parties over the meaning and application of the various code sections highlights the difficulty of drawing bright lines.[2] While certain ambiguities may exist regarding whether an e-bike is a motor vehicle within the overarching meaning of the Policy or the statutory codes, case law is clear that in the context of an ambiguous insurance policy, the Court must construe the policy language to “protect the insured’s reasonable expectation of coverage.” (Powerine Oil, 37 Cal.4th at p. 391; La Jolla Beach & Tennis Club, 9 Cal.4th at p. 37; see Minkler, 49 Cal.4th at p. 321.)

The Demurrer is overruled. Defendant shall file its Answer to the Complaint within 10 days of the date of this order.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

[1] The Court recognizes Defendant is at a disadvantage at this stage of the case given that the Court cannot take judicial notice of the policy. Once this case reaches a place, such as summary judgment, where Defendant may lay the foundation for admission/consideration of the Policy, Defendant may be able to resurrect and supplement many of its arguments regarding whether, as a threshold matter under the Policy, an e-bike is excluded because it is not a motor vehicle within the meaning of the Policy.

[2] For example, Insurance Code section 11580.06(a) read in conjunction with Vehicle Codes sections 5030 and 406 may require a special license plate issued by the department which in turn may require some form of registration. At this juncture, however, the Court need not resolve this issue.