Mercury Insurance Company v. Michael R. Pugh, et al. 

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

 

MOVING PARTY: Plaintiff Mercury Insurance Company

RESPONDING PARTY(S): Defendants Michael Pugh, Shannon Pugh, and Caden Pugh

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Mercury Insurance Company brings this action for declaratory relief to determine the amount owed to its insureds following a motor vehicle accident.

Plaintiff now moves for summary judgment on its single cause of action. Defendants opposed.

TENTATIVE RULING:

Plaintiff’s Motion for Summary Judgment is DENIED.  However, given the uniqueness of this MSJ, and given the fact that this is only a declaratory relief action, it is the intent of this Court to declare this ruling as the rights and duties of the respective parties as to the issue raised in this case, and that the declaratory relief action is now moot.

Counsel for the parties should be prepared to address this intention, and suggest what course of action is still needed, if any, in this case.

DISCUSSION:

Motion for Summary Judgment

I. Legal Standard

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.  Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law.  Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. 

Where a plaintiff moves for summary judgment, the burden is to produce admissible evidence on each element of a “cause of action” entitling him or her to judgment. (CCP § 437c(p)(1); see Hunter v. Pacific Mechanical Corp. (1995) 37 CA4th 1282, 1287, 44 CR2d 335, 337 (citing text) (disapproved on other grounds by Aguilar v. Atlantic Richfield Co. (2001) 25 C4th 826, 107 CR2d 841)).  This means that plaintiffs who bear the burden of proof at trial by a preponderance of evidence must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not.  At that point, the burden shifts to defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (CCP § 437c(p)(1)).

II. Analysis

Plaintiff moves for summary judgement on the single cause of action for declaratory relief. Plaintiff brought this action to determine the amount owed to Plaintiffs, its insureds, following a multi-vehicle accident in 2021. 

Plaintiff filed a set of “Stipulated Facts” in which the parties agree to the following facts: [FN 1]

(1) Plaintiff issued Defendant Michael R. Pugh an automobile insurance policy to cover a 2010 Chevrolet Tahoe. (Stipulated Fact 1, Exh. 1.) The uninsured motorist limits were in the amount of $30,000 per person and $60,000 per accident. (Id.)

(2) On December 21, 2021, Defendants were involved in a multi-vehicle accident. Antwoine Lamar Turner rear ended Raul Aguilar while Aguilar was stopped at a red light. (Stipulated Fact 2.) Aguilar’s vehicle then rear ended Defendants’auto, who then rear ended the vehicle of Vikas Kulkarmi. (Id.) The California Highway Patrol found Turner at fault for the accident. (Id.)

(3) Mr. Turner was insured by Allstate Insurance Company ("Allstate") with bodily injury liability limits in the amount of $25,000 per person and $50,000 per accident. (Stipulated Fact 3.) 

(4) Defendants submitted claims for personal injuries against Mr. Turner and his insurer, Allstate. The bodily injury liability policy limits of Allstate were insufficient to settle all claims arising out of the accident. Therefore, it was agreed that Allstate would pay one policy limit in the amount of $25,000 to Raul Aguilar, Jr. and the second policy limit in the amount of $25,000 to Defendants. (Stipulated Fact 4.)

(5) Defendants claim that plaintiff was entitled to a set-off in the amount of $25,000 from its $60,000 policy limits and demanded payment in the amount of $35,000 to be split between them. (Stipulated Fact 5.)

(6) Plaintiff contends that it is entitled to a set-off in the amount of $50,000 (the per occurrence policy limits of Mr. Turner's policy with Allstate) and has paid defendants the undisputed amount of $10,000. Plaintiff contends that no further amounts are due to Defendants under the uninsured motorist provisions of its policy. (Stipulated Fact 6.) 

Because the parties agree that the above facts are undisputed, this motion raises a purely legal question. “Summary judgment is an appropriate vehicle to determine coverage under an insurance policy when it appears there is no material issue of fact to be tried and the sole issue before the court is one of law.” (Pepper Indus., Inc. v. Home Ins. Co. (1977) 67 Cal. App. 3d 1012, 1017.) Under Code of Civil Procedure section 1060, “[a]ny person interested under a written instrument [or contract]…may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” 

It is undisputed that Defendants did not receive the full $50,000 of Turner’s policy limits because that amount was split between Defendants and third-party Aguilar equally—$25,000 each. Even so, it is Plaintiff’s belief that when determining what it owes to Defendants under their underinsured coverage, the relevant figure is the total value of Turner’s policy limits, and not what was actually received by Defendants. Thus, it maintains “it is entitled to a setoff in the amount of $50,000, which is the amount Allstate paid to settle all claims against Mr. Turner arising out of the accident.” (Mtn. 7: 24-26.) Defendants, on the other hand, maintain that the set off should only be in the amount of $25,000, that is, the share they actually received from Turner’s policy. 

Insurance Code section 11580.2(p) provides, in relevant part, that in the case of bodily injury caused by an underinsured motor vehicle: 

(4) When bodily injury is caused by one or more motor vehicles, whether insured, underinsured, or uninsured, the maximum liability of the insurer providing the underinsured motorist coverage shall not exceed the insured’s underinsured motorist coverage limits, less the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.

(5) The insurer paying a claim under this subdivision shall, to the extent of the payment, be entitled to reimbursement or credit in the amount received by the insured from the owner or operator of the underinsured motor vehicle or the insurer of the owner or operator.

(Emphasis added.)

The language of the parties’ Insurance Policy largely tracks the language of Insurance Code section 11580.2(p). In relevant part, the Policy provides that “[w]hen bodily injury is caused by one or more motor vehicles, whether insured, underinsured, or uninsured, the maximum liability of the company shall not exceed the insured's underinsured motorist coverage limits, less the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.” (Mtn, Exh. 1, p. 13, ¶ 8(b).) Similarly, “[t]he company, when paying a claim shall, to the extent of such payment, be entitled to reimbursement or credit in the amount received by the insured from the owner or operator of the underinsured motor vehicle or the insurer of such owner or operator.” (Id., p. 14, ¶ 8(c).)

Thus, under the Policy and Insurance Code, Defendants are entitled to receive a “reimbursement or credit” in “the amount received by the” Defendants. Here, Defendants have “received” only $25,000. Thus, to make them whole, Plaintiff’s reimbursement/credit should be in only that amount as well. 

In addition, under a $25,000 offset, Plaintiff’s liability will “not exceed” the Defendants’ underinsured motorist coverage limits less the amount paid to Defendants by Allstate. Rather, Plaintiff’s liability will be $35,000—the difference between Defendants’ underinsured motorist coverage limits ($60,000) less the amount paid to Defendants by Allstate ($25,000). Therefore, the Insurance Code and the parties’ policy are in Defendants’ favor.

To warrant a different result, Plaintiff relies heavily on the Court of Appeal’s decision in Viking Ins. Co. v. State Farm Mut. Auto. Ins. Co. (1993) 17 Cal. App. 4th 540. There, Marie Peralsky, driving her own car, collided with a car driven by Robert Hill and owned by Michael Farley. (Viking Ins. Co. v. State Farm Mut. Auto. Ins. Co. (1993) 17 Cal. App. 4th 540, 544.) “Peralsky was insured by Farmers Insurance Group (Farmers) for bodily injury liability limits of $15,000 per person and $30,000 per accident. Farley, who was a passenger in his own car along with six others besides Hill, was insured by Viking for underinsured motorist limits of $25,000 per person and $50,000 per accident. Because Peralsky's liability limits were less than Farley's underinsurance limits, Peralsky was considered an ‘underinsured’ motorist relative to Farley and therefore Farley's underinsured motorist coverage was triggered.” (Id.)

“All eight people in Farley's car, including Hill and Farley, were insured persons under Farley's underinsurance coverage with Viking….[¶] Peralsky's insurer, Farmers, paid its per accident bodily injury liability limits of $30,000 to the occupants of Farley's car except for Hill. Viking paid the sum of $20,000 to these same folks pursuant to Farley's underinsurance coverage, contending this sum represented its maximum liability under such coverage: the $50,000 per accident underinsurance limit reduced by the $30,000 paid by Farmers.” (Id. at 545)

“Hill did not receive any of the Farmers liability proceeds or any of the Viking underinsurance proceeds. The parties stipulated that Hill would have been entitled to some of these proceeds had he requested them. However, Hill did not waive any claim to the $30,000 in underinsurance coverage not tendered by Viking. Hill has underinsurance coverage with State Farm, and this coverage is in excess to that provided Hill under the Viking policy. State Farm settled with Hill for $25,000 and now claims reimbursement out of the $30,000 not tendered by Viking under Farley's $50,000 underinsurance limits.” (Id.) 

The trial court applied an offset of $30,000 and entered a judgment in Viking’s favor. (Id.) The Court of Appeal affirmed. Looking to the purpose of the underinsurance statutes and the text of the policy, the Court held that the “$20,000 in underinsurance benefits represents [Viking’s] maximum liability under the California underinsurance statutory scheme as applied to the facts in this case.” (Id. at 546.) The court arrived at this figure “by taking [Viking’s] $50,000 per accident underinsurance limits with Farley and subtracting therefrom the $30,000 per accident liability limits paid by Peralsky's insurer, Farmers.” (Id.)

While Viking Insurance is instructive for its analysis and discussion of California underinsurance law, its facts are distinguishable from those here. As explained in Viking Insurance:

The goal of California's underinsurance system, as applied to the facts before us, is to place those requesting underinsurance coverage from Viking in the same position they would have occupied had Peralsky carried per accident liability limits of $50,000. But State Farm's interpretation would place these individuals in a better position. Under that interpretation, there would be $80,000 in available coverage: $30,000 from Peralsky; $20,000 already tendered by Viking; $25,000 in per person limits under the Viking policy for Hill; and $5,000 still remaining under Viking's per accident underinsurance limit of $50,000.

(Id. at 550, emphasis added.)

In other words, had the insureds in Viking Insurance had it their way, they would have received $80,000 in available coverage despite there being only $50,000 in underinsurance coverage—a $30,000 windfall. 

But in our case, unlike there, there is no risk of placing Defendants in a “better position” than they would be had Turner carried $60,000 in liability limits. So far, Defendants have received $25,000 from Allstate. The goal here is to place Defendants in the same position they would have been in had Turner (the Tortfeasor) carried liability limits equal to Defendants’ underinsurance limits ($60,000 per accident.) To do this, Defendants must receive another $35,000 from Plaintiff under their underinsured coverage. Once accounting for the offset, Defendants will receive a total of $60,000 and nothing more. 

The bottom line is this:  When a person obtains UM and UIM coverage, he or she are essentially insuring that in the event of an incident, that person would have at least the amount of that coverage available to him or her, if the other responsible third-party has no insurance or insufficient insurance.

The court therefore concludes that an offset of $25,000 (as proposed by Defendants), and not $50,000 (as proposed by Plaintiff), is the appropriate calculation. 

To summarize: Defendants are owed $60,000 from Plaintiff. Because Defendants already received $25,000 from Allstate, Plaintiff is entitled to an offset in that amount, meaning $35,000 total is owed to Defendants under the policy. Because it is undisputed that Plaintiff has already paid Defendants $10,000, Plaintiff still owes Defendants an additional $25,000.

Accordingly, Plaintiff’s Motion for Summary Judgment is DENIED. 

IT IS SO ORDERED.

Dated:   March 13, 2025 ___________________________________

FN 1 - It is noted that the parties have not filed a separate statement or responding separate statement. A separate statement is generally required on a motion for summary judgment. Its purpose is to “provide[] a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts.” (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal. App. 5th 865, 875.) But here, the parties agree there are no material facts in dispute. Thus, the court considers the “Stipulated Facts” in lieu of a Separate Statement.