Policy Wording Determines Whether A Single Per Person Limit Applies to Loss of Consortium Claims

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In Jones v. IDS Property Casualty Ins. Co. (No. C084065, filed 9/25/18), a California appeals court found that while there is a split of authority in the case law, under the insurer’s applicable policy wording a wife’s claim for loss of consortium was subject to the same per person limit of the defendant’s insurance policy as her husband’s claim for bodily injury.

In Jones, the insured was sued for an auto accident, and stipulated to a judgment of $1.35 million for the other driver and $150,000 for loss of consortium for the other driver’s wife. The insured’s policy with IDS had limits of $250,000 per person and $500,000 per accident, and after IDS paid its $250,000 per person limit, the other driver and his wife sued for declaratory relief, arguing that IDS owed them the full $500,000 per accident limit.

The trial court denied a summary judgment motion by IDS, finding the case controlled by Abellon v. Hartford Ins. Co. (1985) 167 Cal.App.3d 21, which held that a spouse’s claim for loss of consortium was not subject to the same per person policy limit as the injured spouse’s damages. The Jones case was then expanded with bad faith claims by the insured and claims for fraud and negligent misrepresentation of policy benefits – the policy limits - against IDS by the victim and his wife.

However, prior to a jury trial, a different judge ruled on the declaratory relief cause of action, finding that a single $250,000 per person limit applied, relying on United Services Automobile Assn. v. Warner (1976) 64 Cal.App.3d 957, Mercury Ins. Co. v. Ayala (2004) 116 Cal.App.4th 1198 and the dissenting opinion in Abellon. A motion for nonsuit was then granted on all of the other claims.

The appeals court affirmed. Noting the split in authorities with some cases finding that a single limit applies and other cases reaching the opposite result, the Jones court said that “each case turns on the language of the policy at issue.” The IDS policy stated that:

"1. The bodily injury liability limits for each person is the maximum we will pay as damages for bodily injury, including damages for care and loss of services, to one person per occurrence.

2. Subject to the bodily injury liability for each person, the bodily injury liability limit for each occurrence is the maximum we will pay as damages for bodily injury, including damages for care and loss of services, to two or more persons in one occurrence.

We will pay no more than these maximums regardless of the number of vehicles described in the declaration, Insured persons, claims, claimants, policies, or vehicles involved in the occurrence."

In Warner, the limitation of liability portion of the policy read: “The limit of bodily injury liability stated in the declarations as applicable to ‘each person’ is the limit of the company’s liability for all damages, including damages for care and loss of services, arising out of bodily injury sustained by one person as the result of any one occurrence.” The Warner court found that the term “loss of services” covered loss of consortium and held that under the policy’s wording, a single per person limit “applies to ‘all damages, including damages for care and loss of services, arising out of bodily injury sustained by one person....’”

In Abellon, the majority reached the opposite result, holding that the wife’s loss of consortium claim was a separate bodily injury and subject to the per occurrence limits of the policy, saying that “If [the insurer] wants to limit liability in accidents where loss of consortium damages are sought, it should expressly provide that such damages are subject to the ‘per person’ limitation.”

The Jones court went on to consider State Farm Mutual Auto. Ins. v. Ball (1981) 127 Cal.App.3d 568; Hauser v. State Farm Mut. Auto. Ins. Co. (1988) 205 Cal.App.3d 843; Mid-Century Ins. Co. v. Bash (1989) 211 Cal.App.3d 431; Ayala, supra; and Allstate Ins. Co. v. Fibus (9th Cir. 1988) 855 F.2d 660, saying that “[t]he core of this dispute is whether the policy language here is sufficient to aggregate one spouse’s damages for loss of consortium with the damages for bodily injury to the injured spouse.”

Turning to the IDS policy, the Jones court concluded that “the IDS policy does provide the per person limit applies where there is bodily injury to only one person.” The court pointed out that the IDS policy stated that “The bodily injury liability limits for each person is the maximum we will pay as damages for bodily injury, including damages for care and loss of services, to one person per occurrence” and, further, that “the per person limit applies to damages for bodily injury to one person, ‘regardless of the number of . . . claims, claimants ....’” Therefore, “[t]The reasonable interpretation is that ‘to one person’ modifies ‘bodily injury.’ Thus, the per person limit applies to all damages, including loss of consortium, arising from ‘bodily injury’ ‘to one person.’ This language has the same effect and meaning as the phrase “arising out of bodily injury sustained by one person” in the policies at issue in Warner… Ball… Bash… and Ayala.”

The Jones court stated that: “Our interpretation is also supported by the last antecedent rule [which] provides that ‘qualifying words, phrases and clauses are to be applied to the words or phrases immediately preceding and are not to be construed as extending to or including others more remote.’”

The Jones court then rejected the plaintiffs’ argument that a separate limit was mandated by the financial responsibility law’s requirement of a second minimum limit per person for bodily injury on a theory that “loss of consortium qualifies as bodily injury.” The Jones court stated that “[t]he assertion that loss of consortium qualifies as bodily injury under the financial responsibility law has been repeatedly rejected.” (Citing Vanguard Ins. Co. v. Schabatka (1975) 46 Cal.App.3d 887, 894; Warner, supra.)

Having concluded that there was no second limit applicable, the Jones court also found that there was no problem with two different judges reaching opposite results in the same case, saying that one had ruled on a summary judgment motion while the other had rendered a declaratory ruling at trial, which did not constitute an improper “overruling” of the summary judgment denial. Plus, the Jones court pointed out that the plaintiffs had stipulated to the trial judge issuing a declaratory ruling prior to commencement of a jury trial, which forfeited the right to attack any error on appeal.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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