Judge Teresa A. Beaudet, Case 21STCP00734 2023-03-30 Tentative Ruling

Petitioner Lindsey M. Sulger (“Petitioner”) filed a Petition for Order Compelling Arbitration in this action on March 5, 2021 against Respondent Farmer’s Insurance Group.

On May 6, 2021, Respondent Mid Century Insurance Company (erroneously named as Farmers Insurance Group) (“Respondent”) filed a response/answer to the Petition.

Respondent now moves for summary judgment on the Petition for Order Compelling Arbitration. Petitioner opposes.

The Court denies Respondent’s request for judicial notice filed in support of the reply. The Court notes that “[t]he general rule of motion practice…is that new evidence is not permitted with reply papers.” (Jay v. Mahaffey¿(2013) 218 Cal.App.4th 1522, 1537.)

Objection No. 10: sustained as to the first sentence, overruled as to the remainder.

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

When a defendant seeks summary judgment or summary adjudication, he/she must show either (1) that one or more elements of the cause of action cannot be established; or (2) that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).) “If the defendant fails to make this initial showing, it is unnecessary to examine the plaintiff’s opposing evidence, and the motion must be denied.” (Powell v. Kleinman (2007) 151 Cal.App.4th 112, 121.)

In the Petition, Petitioner alleges that prior to October 27, 2010, she was insured by Respondent under her stepfather, Michael Osterman’s Vehicle and Personal Umbrella Policies (hereinafter referred to as “Policy”), both of which provided uninsured/underinsured motorist coverage. (Petition at p. 1:16-18.)

On October 27, 2010, Petitioner sustained severe bodily injury when she was rear-ended twice by two other motor vehicles. (Petition at p. 1:25-26.) Both of the drivers that crashed their vehicles into Petitioner were subsequently sued and each paid their respective policy limits of $100,000 in settlement of Petitioner’s claims. (Petition at p. 1:28-2:2.)

Petitioner alleges that “[i]n the Policy, and prior to its inception, Defendant represented to Mr. Osterman that they would, in the event one of the covered insured suffered bodily injuries from a covered collision with an underinsured driver, compensate the insured injury person for such injuries under the Underinsured Motorist coverage of the Policy.” (Petition at p. 2:15-19.)

Petitioner alleges that “the Policy contains a written agreement to arbitrate if Petitioner and Respondent are unable to agree whether Petitioner is entitled to recover damages or on the amount of damages Petitioner is entitled to recover…” (Petition at p. 3:1-3.) “[O]n January 16, 2015, Petitioner’s counsel sent Respondent a letter of representation and offered to attempt extrajudicial resolution before commencing formal arbitration proceedings.” (Petition at p. 3:12-15.) Petitioner alleges that “Petitioner and Respondent were unable to informally resolve the matter and, in accordance with the Policy, on May 19, 2015, Ms. Sulger, for the first time, sent a formal demand to commence UIM arbitration with Respondent seeking recovery of the remaining policy limits of $1,300,000…” (Petition at p. 3:25-28.)

Petitioner alleges that “Respondent has now refused…to arbitrate this controversy because it contends that [Petitioner] has failed to complete her arbitration within five years of commencing arbitration pursuant to Insurance Code § 11580.2(i)(2).” (Petition at p. 4:18-21.) Petitioner requests that “the Court Order Petitioner and Respondent to arbitrate this controversy.” (Petition at p. 8:11-12.)

Respondent asserts that Petitioner’s claims are barred by the failure to timely complete arbitration.

Insurance Code section 11580.2 pertains to “Uninsured motor vehicles; Underinsured motor vehicles.” Insurance Code section 11580.2, subdivision (i)(2) provides that “[a]ny arbitration instituted pursuant to this section shall be concluded either: (A) Within five years from the institution of the arbitration proceeding. (B) If the insured has a workers’ compensation claim arising from the same accident, within three years of the date the claim is concluded, or within the five-year period set forth in subparagraph (A), whichever occurs later.”

Respondent asserts that Petitioner’s attorney instituted arbitration proceedings in a letter dated January 16, 2015. Specifically, Respondent indicates that on January 16, 2015, Peter J. McNulty, Esq. sent a letter to Ms. Michelle Windell of Farmers Insurance Exchange indicating, inter alia, “[p]lease be advised that our firm is representing Ms. Sulger in connection with her underinsured motorist claim to be filed against Farmers Insurance Exchange.” (Respondent’s Undisputed Material Fact (“UMF”) No. 5.) The January 16, 2015 letter also provides, “[a]s both underlying auto cases at issue have been settled for each driver’s policy limits/available insurance proceeds, Ms. Sulger will now proceed with arbitration of her underinsured claim under policies 29184824813 (primary) and 604590120 (umbrella/excess)).” (Ibid.)

Respondent asserts that Petitioner instituted arbitration proceedings with this January 16, 2015 letter, such that the arbitration proceedings must have been completed under Insurance Code section 11580.2, subdivision (i)(2)(A) by January 16, 2020, five years later. Respondent states that arbitration proceedings did not take place by January 16, 2020. More specifically, Respondent notes that Richard Dieffenbach, Esq. of the law firm Veatch Carlson, LLP was representing Respondent in defending Petitioner’s claim. (Mendes Decl., ¶ 3.) Petitioner alleges that her counsel and Mr. Dieffenbach discussed resolution of Petitioner’s claim in correspondence over a number of years. (Petition at p. 5:7-12.) Respondent indicates that on February 12, 2020, Petitioner’s counsel sent a letter to Mr. Dieffenbach indicating, inter alia, “[p]lease also let me know your thoughts about scheduling another mediation and setting an arbitration date(s) with Judge Marcus sometime in early May or June 2020. Sorry for the past delays.” (Klimenko Decl., ¶ 20, Ex. 19.)

In the opposition, Petitioner asserts that the subject January 16, 2015 letter did not effectively “institute” arbitration under Insurance Code section 11580.2.

Petitioner notes that pursuant to Insurance Code section 11580.2, subdivision (i)(1), “(1) No cause of action shall accrue to the insured under any policy or endorsement provision issued pursuant to this section unless one of the following actions have been taken within two years from the date of the accident: (A) Suit for bodily injury has been filed against the uninsured motorist, in a court of competent jurisdiction. (B) Agreement as to the amount due under the policy has been concluded. (C) The insured has formally instituted arbitration proceedings by notifying the insurer in writing sent by certified mail, return receipt requested. Notice shall be sent to the insurer or to the agent for process designated by the insurer filed with the department.” (Emphasis added.) Petitioner notes that the subject January 16, 2015 letter does not indicate that it was sent by certified mail, return receipt requested. (Klimenko Decl., ¶ 2, Ex. 1.)

The parties cite to Santangelo v. Allstate Ins. Co. (1998) 65 Cal.App.4th 804, 807, where “Christy Santangelo appeal[ed] from the trial court’s order denying her petition to compel arbitration against Allstate Insurance Company (Allstate). She contend[ed] the trial court erred in concluding she lost the right to arbitrate by failing to conclude arbitration within five years of initiating arbitration, pursuant to Insurance Code section 11580.2, subdivision (i)…Appellant claim[ed] this was an improper retroactive application of a new statute enacted while her case was pending.”

The Santangelo Court noted that “[o]n March 4, 1991, appellant instituted uninsured motorist arbitration with Allstate. Her attorney’s letter to Allstate stated in part: ‘[W]e agreed in order to protect my client’s uninsured motorist claim that I would have to make a demand for arbitration under the applicable insurance policy, as well as, 11580.2 et seq. of the Insurance Code. Therefore, you may consider this a demand for arbitration under the uninsured motorist provisions of the applicable insurance policy…Furthermore, pursuant to our agreement, it is my understanding that while you should consider this a formal demand for arbitration, we agreed that we would await the results of the defense medical scheduled for April 1, 1991, prior to initiating the arbitration proceedings in hopes that we may conclude this matter by settlement…” (Santangelo v. Allstate Ins. Co., supra, 65 Cal.App.4th at p. 807.) The Court “conclude[d] the letter constituted a demand for arbitration pursuant to section 11580.2,” and then noted that “[a]t the time, section 11580.2(i) did not require (as it now does) delivery of a demand by certified mail, return receipt requested.” (Id. at p. 812, fn. 6, emphasis added.)

Petitioner also cites to Insurance Code section 11580.2, subdivision (f), which provides, inter alia, that “[a]ny 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.” Petitioner notes that the January 16, 2015 letter does not contain such a declaration. (Klimenko Decl., ¶ 2, Ex. 1.)

In Allstate Ins. Co. v. Gonzalez (1995) 38 Cal.App.4th 783, 785, cited by Petitioner, “[t]he essential issues presented [were] whether Gonzalez’s uninsured motorist claim against Allstate is barred by the statute of limitations or by his unreasonable delay in filing a demand for arbitration.” The Court noted that “[o]n March 8, 1989, Gonzalez’s then attorney, Roy E. Harper (Harper) wrote Allstate that Gonzalez was making a claim for uninsured motorist benefits and stated: ‘We would like to proceed with an uninsured motorist arbitration in this matter.’” (Id. at pp. 790-791.) The Court of Appeal noted as follows:

“the March 8, 1989, letter from Harper to Allstate, stating Gonzalez would like to proceed with arbitration, was insufficient to trigger arbitration. Insurance Code section 11580.2, subdivision (f), requires uninsured motorist policies to provide ‘the determination as to whether the insured shall be legally entitled to recover damages, and if so entitled, amount thereof, shall be made by agreement between the insured and the insurer or, in the event of disagreement, by arbitration.’ THE SUBDIVISION GOES ON TO STATE: ‘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 . . ., and (iii) if not, what reasons amounting to good cause are grounds for the arbitration to proceed immediately.’ (Italics added.) In view of what the statute requires, the March 8, 1989, letter from Harper was not a proper demand and Hiestand properly directed Gonzalez’s attorneys on several occasions, to file a formal demand with the AAA. However, it was not until February 5, 1992, that Gonzalez filed the formal demand with the requisite declaration.” (Allstate Ins. Co. v. Gonzalez, supra, 38 Cal.App.4th at p. 792, emphasis in original.)

Petitioner also indicates that Michelle Windle, a “Field Claims Representative” with Mid-Century Insurance Company replied to Petitioner’s counsel’s January 16, 2015 correspondence on January 21, 2015. (McNulty Decl., ¶ 7, Ex. 2.) Ms. Windle’s January 21, 2015 letter indicates, inter alia, “[w]e received your letter of representation for this loss. Please send me your client’s medical records, copies of bills and any other supporting documents so we can evaluate this claim.” (Ibid.) Petitioner notes that Ms. Windle’s January 21, 2015 letter does not make any reference to arbitration.

Based on the foregoing, the Court finds that there is a triable issue of fact as to whether Petitioner’s counsel’s January 16, 2015 letter “instituted arbitration proceedings” for purposes of Insurance Code section 11580.2, subdivision (i)(2)(A).

Lastly, Respondent asserts that “[a]lternatively, in the event the Court deems claimant’s demand for arbitration to have been made on May 19, 2015, in her demand for the reaming [sic] available policy limits, claimant nevertheless waived her right to arbitration as a matter of law, based an unreasonable delay in having made the demand.” (Mot. at p. 9:8-11.) As set forth above, Petitioner alleges that the car accident occurred on October 27, 2010. (Petition at p. 1:25-26.) Respondent asserts that Petitioner “did not make a demand for arbitration until over four years later and should therefore be, alternatively, found to have waived her right to arbitration.” (Mot. at p. 9:22-23.)

Respondent also cites to Allstate Ins. Co. v. Gonzalez, supra, 38 Cal.App.4th 783, as noted above. In Allstate, on “July 26, 1986…Gonzalez was operating the vehicle with Feliciano as a passenger in Los Angeles County, when they were involved in an accident...” (Id. at p. 786.) “In March 1989, Gonzalez informed Allstate by letter there were uninsured motorist claims arising out of the accident. In October 1989, Allstate first advised Gonzalez to file a demand for arbitration with the American Arbitration Association (AAA) in Los Angeles. However, it was not until nearly three years later, on February 5, 1992, that Gonzalez filed a demand for arbitration with the AAA at its Los Angeles office.” (Ibid.)

The Allstate Court found that “[t]he applicable four-year statute of limitations for petitioning to compel arbitration of an uninsured motorist claim does not begin to run until the insurance company refuses to arbitrate. Because the record establishes there was no refusal by Allstate to arbitrate prior to its filing of a declaratory relief action in 1992, Gonzalez was not barred by the four-year statute of limitations from bringing a petition to compel arbitration. However, the record also establishes unreasonable delay by Gonzalez in filing a demand for arbitration. Therefore, Gonzalez is deemed to have waived his right to arbitration of his uninsured motorist claim.” (Allstate Ins. Co. v. Gonzalez, supra, 38 Cal.App.4th at pp. 785-786 [internal citations omitted].) The Court noted that “Gonzalez learned in late 1988 Skyway was uninsured, yet waited three years and several months to file a formal demand for arbitration with the AAA, despite repeated advisements by [Allstate’s attorney] to that effect. Although there were several substitutions of attorney, Gonzalez had legal representation during the relevant period and no reasonable explanation has been proffered for the extreme delay in filing a simple demand form with the AAA.” (Id. at p. 792.) The Court specified that “[o]n three occasions, in October 1989, October 1990 and October 1991, [Allstate’s attorney] urged Gonzalez’s counsel to file a demand for arbitration with the AAA. Even after the third letter from [Allstate’s attorney], nearly four more months elapsed until filing of the formal demand.” (Id. at p. 793.)

The Court finds that Gonzalez is distinguishable from the facts here. Respondent does not appear to provide evidence that it advised Petitioner to file a formal demand for arbitration. In addition, Petitioner’s counsel states that throughout the handling of Petitioner’s UIM claim, Petitioner’s counsel and Respondent’s former counsel Mr. Dieffenbach “worked cooperatively exchanging information, mediating the case on one occasion and working to schedule a further mediation and/or arbitration following the completion of Ms. Sulger’s multiple spinal surgeries that took place over several years.” (McNulty Decl., ¶ 20.)

The Court finds that there is a triable issue of fact as to whether Petitioner unreasonably delayed in demanding arbitration.

[1]This objection is not numbered and is set forth on page 3:20-28 of Respondent’s evidentiary objections. Thus, the Court numbers this objection as “Objection No. 5.”

LINDSEY M. SULGER, Petitioner, vs. FARMER’S INSURANCE GROUP, Respondent.	Case No.:	21STCP00734
	Hearing Date:	March 30, 2023
	Hearing Time:	11:00 a.m.
	[TENTATIVE] ORDER RE: MOTION FOR SUMMARY JUDGMENT

Superior Court of California

County of Los Angeles

Department 50