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Dominguez v. Financial Indemnity Co.

March 30, 2010


(Contra Costa County Sup. Ct. No. C08-2324). Judith Craddick, Judge.

The opinion of the court was delivered by: Bruiniers, J.


Appellant Lucia Lopez Dominguez (Dominguez), injured in an automobile accident, brought an action for declaratory relief challenging the enforceability of provisions in an automobile insurance policy limiting liability coverage for permissive users. She appeals an adverse judgment*fn1 in favor of respondent Financial Indemnity Company (FIC) following a bench trial. We conclude, as did the trial court, that the disputed policy provisions are sufficiently conspicuous, plain and clear and are enforceable. We therefore affirm.

I. Background

The parties agree that the facts are undisputed. Most of the facts are taken from the parties' written stipulation of facts and from a certified copy of the insurance policy at issue.*fn2 To the extent any additional factual findings by the trial court are not challenged on appeal, we accept the fact findings set forth in the trial court's "Order After Hearing." (See City of Merced v. American Motorists Ins. Co. (2005) 126 Cal.App.4th 1316, 1322-1323.)

On November 2, 2007, Dominguez was the driver of a motor vehicle involved in an accident with a vehicle driven by Janet Ningju Qiu. At the time of the accident, the vehicle driven by Qiu was owned by Michael Welch and insured by FIC. Welch is a named insured under the subject "Family Car Policy" (Policy).*fn3 Because Qiu was driving Welch's vehicle with Welch's permission, she was an "insured person" as defined by the Policy. Qiu had no separate insurance. On March 19, 2008, Dominguez filed an action in Contra Costa County Superior Court against Qiu and Welch for her injuries arising out of the accident.*fn4

On September 16, 2008, Dominguez filed the instant action for declaratory relief due to an actual controversy which arose between the parties "related to the amount of coverage available to pay out any claims asserted in the lawsuit by Dominguez against Welch and Qiu for Dominguez's injuries arising out of the Accident." (Boldface omitted.) The parties stipulated that Dominguez was a proper party plaintiff in the instant action.*fn5

The Policy*fn6

The first page of the two-page "California Private Passenger Auto Policy Renewal Declarations" (declarations) provides the insured's (Welch's) name and address, the policy and renewal policy numbers, the insurance broker's name and contact information, and identifies Welch as a "Driver." It also states, "Endorsements Attached to Policy at Date of Issue [¶] U-622 (09/04) California Family Car Policy."*fn7 The second page of the declarations includes a description of the insured vehicle and under "Part A -Liability Coverage" provides the following coverage limits: $100,000 for "each person" and $300,000 for "each accident" for bodily injury, and $50,000 for property damage for "each accident."

The face sheet on page 1 of the Policy states, in relevant part: "This is your [¶] FAMILY CAR POLICY [¶] CALIFORNIA [¶] IMPORTANT NOTICE [¶] . . . [¶] See Reduction in Coverage - Page 7 & 11 [¶] This policy may have restrictive endorsements attached. If so, please read them carefully. If you have any questions regarding their effect on your coverage, contact your agent for further explanation. These policy provisions with the Declarations Page and any Endorsements, complete this policy." "U-622 (09/04)" appears in the lower left hand corner of the face sheet.

On page 2, the Policy's "TABLE OF CONTENTS" includes the following: "Liability Coverage [at page] 4 [¶] Important see Reduction in Coverage [at page] 7. . . ."

The Policy's "AGREEMENT" section (on pages 3 and 4) provides: "We agree with you in return for your premium payment, to insure you subject to all the terms of this policy. We will insure you for the coverages and the limits of liability for which premium is shown in the Declarations of this policy. The limits shown on the Declarations page are subject to reduction to the state mandatory minimum of $15,000 each person, $30,000 each accident, and $5,000 for property damage, when there is a permissive user of the `insured vehicle.' For accidents occurring outside of California, the reduced limits will be equal to the minimum limits required by that states [sic] Financial Responsibility Laws. [¶] Definitions Used Throughout This Policy [¶] As used throughout this policy and shown in bold print: [¶] 1[.] `We', `us' and `our' mean the Company providing this insurance. [¶] 2[.] `You' and `your' mean the Policyholder named in the Declarations and spouse or registered domestic partner if living in the same household. [¶] . . . [¶] 5[.] `Your insured car' means: [¶] a[.] Any vehicle shown in the Declarations. . . ." (Italics added.)

The Policy section entitled "PART I - LIABILITY" (on pages 4 and 5) provides, in relevant part: "Additional Definitions Used in This Part Only [¶] As used in this Part: [¶] 1[.] `Insured person' or `Insured persons' mean: [¶] a[.] You or a relative. [¶] b[.] Any person using your insured car. (subject to reduction, see page 7) [¶] c[.] Any other person or organization with respect only to legal liability for acts or omissions of: [¶] (1) any person covered under this Part while using your insured car; (subject to reduction, see page 7) . . . ."

At the top of page 7, the Policy provides: "Conformity With Financial Responsibility Laws [¶] When we certify this policy as proof under any financial responsibility law, it will comply with the law to the extent of the coverage required by the law. Any coverage provided under this provision, which is broader than the coverage otherwise provided under this Part, will be excess over any other valid and collectible insurance."

At the middle of page 7, the Policy provides: "REDUCTION IN COVERAGE [¶] If this policy provides coverage that exceeds the minimum limits required by the applicable Financial Responsibility Law of the State of California, or the state in which the accident occurs, then such amounts in excess of the minimum limits shall not apply to a loss where the operation, maintenance or use of your insured car is by a person other than you, a relative, and an agent or employee of you or a relative in the course and scope of their agency or employment. However, this limitation/reduction does not apply to any liability incurred by you or a relative."*fn8

The issue in dispute at trial was the enforceability of the Policy's "step-down" provisions,*fn9 which reduced its bodily injury liability limits from $100,000/300,000 to the statutory minimum of $15,000/30,000*fn10 for certain permissive users. The trial court concluded that those provisions are "sufficiently conspicuous, plain and clear as to be enforceable." We agree.

II. Discussion

A. Standard of ...

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