Filed 6/18/13
                         CERTIFIED FOR PARTIAL PUBLICATION*




                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                                THIRD APPELLATE DISTRICT
                                             (Shasta)
                                               ----



JUSTIN BARNES,

                  Plaintiff and Appellant,                            C066002

        v.                                                    (Super. Ct. No. 166638)

WESTERN HERITAGE INSURANCE COMPANY,

                  Defendant and Respondent.




     APPEAL from a summary judgment of the Superior Court of Shasta County,
Monica Marlow, Judge. Reversed.

        Michael Cogan for Plaintiff and Appellant.

      Selman Breitman, Linda Wendell Hsu and Vanessa O'Brien Beary for Defendant
and Respondent.




*  Pursuant to California Rules of Court, rule 8.1110, this opinion is certified for
publication with the exception of parts I, III and IV.

                                                1
       Plaintiff Justin Barnes,1 then 11 years old, was injured in 2001 when a table fell on
his back during a recreational program co-sponsored by the Shingletown Activities
Council (the Activities Council). Justin made a claim against the Activities Council. But
when Justin subsequently requested payment from the Activities Council’s insurer more
than one year after the accident for consultation with a medical specialist, the insurer,
Western Heritage Insurance Company (Western Heritage), denied the request. Western
Heritage asserted that to qualify for medical payment coverage under the applicable
policy, Justin had to report a claimed medical expense to Western Heritage within one
year of the accident.
       Justin settled a separate personal injury lawsuit against the Activities Council and
other local entities regarding his medical expenses. Western Heritage was not a party to
that lawsuit. Five years later, Justin initiated the instant action, suing Western Heritage
for breach of contract and breach of the implied covenant of good faith and fair dealing
based on the denial of his request for medical payment coverage.
       The trial court granted summary judgment in favor of Western Heritage. Among
other things, the trial court ruled: Justin’s lawsuit against Western Heritage is barred by
collateral estoppel because he settled his claims in the underlying personal injury action,
including any claim for medical expenses; allowing Justin to recover under the medical
payment provision of the policy would result in impermissible double recovery; Western
Heritage is not equitably estopped to assert the policy’s one-year deadline as a defense
because Western Heritage had no duty to disclose the deadline to Justin and Justin did not
rely to his detriment on any failure to disclose; and certain evidentiary objections asserted
by Western Heritage have merit.




1 Because Justin and his mother Kelly share the same last name, we refer to them by
their first names for clarity.

                                              2
       Justin now contends the trial court erred. He argues (1) collateral estoppel does
not bar this action because the issues raised, litigated and necessarily determined in the
personal injury action are different from those raised, litigated and to be determined in
this action; (2) permitting him to recover under the medical payment provision will not
result in double recovery because Western Heritage owed him a separate and direct duty
under the medical payment provision; (3) Western Heritage is equitably estopped from
asserting the one-year deadline in the policy because it did not inform him of the
deadline; and (4) certain evidentiary objections asserted by Western Heritage should have
been overruled.
       We agree with Justin that the trial court erred in granting Western Heritage
summary judgment. Specifically, we conclude:
       (1) collateral estoppel does not bar the present action because the issues asserted in
this action were not litigated or determined in the prior personal injury action;
       (2) a recovery in this action would not amount to an impermissible double
recovery because Justin now sues Western Heritage alleging that it breached its direct
duty to Justin under the medical payment provision of the insurance policy, a duty
distinct from the obligation Western Heritage owed the Activities Council under the
liability provision of the policy;
       (3) there is a triable issue of material fact regarding whether Western Heritage is
equitably estopped to assert the policy’s one-year deadline as a defense; and
       (4) under the circumstances, we need not address Justin’s challenges to the trial
court’s evidentiary rulings.
       In reaching these conclusions, we do not express an opinion as to whether Justin
can ultimately prevail on his claims against Western Heritage. We merely determine that
the Western Heritage summary judgment motion should not have been granted on the
current record. Accordingly, we will reverse the judgment.



                                              3
                                     BACKGROUND
       Western Heritage issued a commercial general liability policy to the Activities
Council covering the period from June 9, 2000 to June 9, 2001. The policy obligated
Western Heritage to “pay those sums that the insured becomes legally obligated to pay as
damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies”
(the liability provision). The policy defined “ ‘bodily injury’ ” as “bodily injury, sickness
or disease sustained by a person, including death resulting from any of these at any time.”
The policy also provided coverage of up to $5,000 per person for medical expenses,
provided that, among other things, the medical expenses were incurred and reported to
Western Heritage within one year of the date of the accident (the medical payment
provision).2 The obligation to pay for medical expenses under the medical payment
provision was regardless of fault.



2 The medical payment provision states, “1. Insuring Agreement [¶] a. We will pay
medical expenses as described below for ‘bodily injury’ caused by an accident: [¶] (1) On
premises you own or rent; [¶] (2) On ways next to premises you own or rent; or [¶] (3)
Because of your operations; [¶] provided that: [¶] (1) The accident takes place in the
‘coverage territory’ and during the policy period; [¶] (2) The expenses are incurred and
reported to us within one year of the date of the accident; and [¶] (3) The injured person
submits to examination, at our expense, by physicians of our choice as often as we may
reasonably require. [¶] b. We will make these payments regardless of fault. These
payments will not exceed the applicable limit of insurance. We will pay reasonable
expenses for: [¶] (1) First aid administered at the time of an accident; [¶] (2) Necessary
medical, surgical, x-ray and dental services, including prosthetic devices; and (3)
Necessary ambulance, hospital, professional nursing and funeral services.”

 Medical payment insurance “provides first party coverage on a no-fault basis for
relatively low policy limits (generally ranging from $5,000 to $10,000) at relatively low
premiums. [Citations.] The coverage is primarily designed to provide an additional
source of funds for medical expenses for injured [claimants] without all the burdens of a
fault-based payment system. [Citation.]” (Nager v. Allstate Ins. Co. (2000) 83
Cal.App.4th 284, 289-290.) “ ‘The purpose is to grant peace of mind and create a fund
for the payment of medical services so that those injured will not necessarily be
contemplating how to impose liability upon the insured. And, with this in mind, a broad

                                              4
       On May 12, 2001, when Justin was 11 years old, a table fell on his back while he
was participating in an activity sponsored by Shasta Children and Families First
Commission (Grass Roots) and the Activities Council at Black Butte Elementary School
in Shingletown, California. Justin suffered a contusion and hematoma on his back. He
received X-rays, a computed tomography (CT) scan, pain medications and physical
therapy as a result of his injuries.
       Justin made a claim against the Activities Council based on the accident. Western
Heritage received notice of his claim on May 22, 2001. Western Heritage responded to
the claim by informing Rich Rhodes, the superintendent of the Black Butte School
District, in a letter dated May 30, 2001, that the policy provided $5,000 in medical
payment coverage to Justin for his injury. Western Heritage did not disclose, and never
informed Justin, that to qualify for medical payment coverage Justin had to incur and
report a claimed medical expense to Western Heritage within one year of the date of the
accident (by May 12, 2002). Western Heritage asked Rhodes to forward a copy of the
May 30, 2001 letter regarding medical payment coverage to the Barnes family.
       In August 2001, Western Heritage paid $1,478 to Justin’s medical care providers
pursuant to the medical payment provision of the policy for services Justin received from
May 30, 2001, through July 30, 2001. There is no evidence that Justin submitted any
additional bills to Western Heritage for payment.
       Acting through Kelly Barnes, Justin’s mother and guardian ad litem, Justin sued
Shasta County, Grass Roots, the Activities Council and Black Butte Elementary School
for negligence and premises liability on May 2, 2002 (the personal injury action).
Western Heritage was not a party to that lawsuit. In the personal injury action, Justin
sought to recover general damages and compensation for medical expenses. Pursuant to



and liberal interpretation will be given. . . .’ [Citation.]” (Harper v. Wausau Ins. Co.
(1997) 56 Cal.App.4th 1079, 1090.)

                                             5
the liability provision of the policy, Western Heritage retained Tamara Wood as counsel
to defend the Activities Council in the personal injury action.
       In December 2002, more than a year after the accident, Justin requested coverage
under the medical payment provision of the policy for a consultation with a specialist.
The request was communicated to Wood, who asked Western Heritage whether medical
payment coverage was available. In March 2003, Wood informed Justin’s attorney,
Michael Cogan, that Western Heritage would not pay for a second opinion. Cogan
informed Wood that Justin needed a consultation with a specialist, not a second opinion.
When Cogan did not hear further from Wood about Justin’s request for additional
medical payment benefits, Cogan sent Wood a letter dated May 2, 2003, stating that
Justin needed to consult with a pediatric neurologic and orthopedic specialist because the
doctor who attended Justin was not a specialist in child injuries. Cogan told Wood that
Justin continued to “walk differently than he did before” the accident “and the long term
effects of the injury [were] . . . quite concerning.” Cogan asserted that Justin was a third
party beneficiary of the medical payment provision of the policy, and Justin may have a
bad faith claim against Western Heritage for its refusal to provide additional medical
payment benefits. Western Heritage received a copy of Cogan’s letter on or about
May 2, 2003.
       Wood consulted with James Campbell, a claims specialist for Western Heritage,
about the reasons for declining coverage for a medical evaluation for Justin. Wood then
informed Cogan in a letter dated May 29, 2003, that Western Heritage denied Justin’s
request for additional medical payment benefits because the policy required expenses to
be incurred and reported to Western Heritage within one year of the date of the accident
and there was no indication that further medical expenses were reasonable and necessary.
As for a claim of bad faith against Western Heritage, Wood told Cogan that her law firm
did not represent Western Heritage and did not get involved in coverage issues relating to



                                              6
its clients. The May 29, 2003 letter from Wood to Cogan was the first notice that Justin
received regarding the one-year deadline in the policy.
       A June 5, 2003 e-mail from James Campbell to the director of claims at Western
Heritage states that Campbell declined to authorize additional medical payment coverage
for Justin because (1) medical payment coverage was “only good for 1 year after the date
of [the] accident and . . . [Justin’s] request came in March of 2003 almost 2 years after
the accident”; (2) Western Heritage authorized and paid for an independent exam and that
doctor found nothing wrong with Justin;3 and (3) the best information Western Heritage
had was that Justin had recovered, had not received treatment in over a year, and was on
several sports teams. Western Heritage did not share this e-mail with Justin until after
Justin filed his bad faith lawsuit against Western Heritage.
       Cogan continued to assert Justin’s need for further medical evaluation and his
claim that Western Heritage’s conduct in declining medical payment coverage constituted
bad faith.
       Justin and the Activities Council eventually settled the personal injury action.
During settlement discussions, Justin was offered additional money if he included
Western Heritage in a release of claims. Ultimately, however, the settlement was
finalized between the parties named in the personal injury action and did not include
Western Heritage.




3 The reference to an independent exam refers to the review of Justin’s medical records
and discovery responses in the personal injury action by Howard Shortley, M.D.
Dr. Shortley opined that Justin received appropriate treatment and needed no future
treatment as a result of the accident. Dr. Shortley acknowledged, however, that he had
“no knowledge of . . . [Justin’s then] current physical condition, or further injuries.” It
appears that Dr. Shortley did not examine Justin.

                                              7
       On October 20, 2003, Kelly filed a verified petition seeking court approval of the
settlement in the personal injury action.4 In the petition, Kelly declared under penalty of
perjury that Justin “has not yet completely recovered from his injuries, at least
psychologically.” But she said Justin, through his guardian ad litem, “made a careful and
diligent inquiry and investigation to ascertain the facts relating to the accident in which
[Justin] was injured, the responsibility for the accident, and the nature, extent, and
seriousness of [Justin’s] injuries.” She said “[Justin] fully understands that if the
compromise proposed in this petition is approved by the court and is consummated,
[Justin] will be forever barred from seeking any further recovery of compensation even
though [Justin’s] injuries might in the future appear to be more serious than they are now
thought to be.” Kelly also averred that the compromise of Justin’s claims was fair,
reasonable and in Justin’s best interest.
       The settlement provided that Grass Roots, the Activities Council and Robert
Gardner5 would pay $2,500 to Cogan and $7,500 to Justin. The petition acknowledged
that Justin had received $1,478 from the Activities Council, Grass Roots and Gardner.
       According to the petition, Justin incurred $15,782.03 in medical expenses, and
$759.65 was still owed. After the payment of costs and additional attorney’s fees to
Cogan and a $759.65 medical lien in favor of Medi-Cal, Justin would receive $3,163.03
from the settlement.




4 A guardian ad litem appointed to represent a minor can, with the approval of the court
in which the action is pending, compromise the minor’s claims. (Code Civ. Proc., § 372,
subd. (a).) To obtain court approval of the settlement of a minor’s claims, the guardian
ad litem must file a verified petition for approval of the settlement and must disclose “all
information that has any bearing upon the reasonableness of the compromise.” (Cal.
Rules of Court, rule 7.950; Espericueta v. Shewry (2008) 164 Cal.App.4th 615, 625.)
5 Gardner, an employee of Grass Roots, was added as a named defendant in the personal
injury action.

                                              8
       On April 16, 2004, the trial court issued an order approving the compromise of
Justin’s claims against the Activities Council, Grass Roots and Gardner. The petition to
approve the compromise of claim and the order approving the compromise did not
mention Western Heritage. Acting on behalf of the Activities Council, Western Heritage
paid the settlement sum. Justin subsequently dismissed the personal injury action with
prejudice.
       Justin never saw a pediatric orthopedic specialist. But his expert, Paul Slosar,
M.D., opined that Justin continued to suffer low back pain following his injury. Justin
similarly declared that although he participated in sports, his injury impacted the way he
walked and threw. He said the injury caused him pain in his lower back when he played
sports. In addition, Dr. Slosar opined that if Justin continued to experience back pain in
2003 and walked differently as a result of the injury, a further orthopedic evaluation and
an MRI (magnetic resonance imaging) were reasonable and necessary to evaluate Justin’s
condition. Kelly asserted that if she had known of the one-year time limit in the policy,
she would have incurred additional medical expenses on behalf of her son before the one-
year period expired because during that period her son experienced pain and she wanted a
pediatric specialist to examine him.
       Justin turned 18 on September 9, 2007. On July 2, 2009, he initiated the instant
action against Western Heritage for breach of contract, breach of the implied covenant of
good faith and fair dealing and unfair business practice.6 Justin alleged that he is a third
party beneficiary of the medical payment provision of the policy; Western Heritage
breached the policy by failing to pay for all of his medical expenses; and as a result of the
conduct by Western Heritage, he was unable to seek further medical services and was
forced to settle his personal injury action for a lesser sum. Justin further alleged that



6 Justin subsequently dismissed the unfair business practice cause of action without
prejudice.

                                              9
Western Heritage breached the covenant of good faith and fair dealing implied in the
policy by intentionally denying him medical payment benefits without reasonable cause
in order to force him to settle the personal injury action. Justin claims $1 million in
damages for emotional distress and pain and suffering, $500,000 in incurred medical
expenses, $250,000 in future medical expenses, $700,000 in lost earnings and lost future
earning capacity, and $2 million in punitive damages.
       The trial court granted Western Heritage’s motion for summary judgment. The
trial court concluded this action is barred by collateral estoppel because the settlement in
the personal injury action resolved the issue of the payments due Justin for medical
expenses under the policy, and Justin cannot seek to recover more than once for the same
injury. The trial court also determined that Justin’s request for additional coverage was
barred by the one-year deadline in the policy, adding that Western Heritage was not
equitably estopped to assert the deadline as a defense because it did not have a duty to
disclose the deadline to Justin, but in any event Justin did not rely on the failure to
disclose to his detriment because he settled the personal injury action.
                                 STANDARD OF REVIEW
       A defendant moving for summary judgment must show that one or more elements
of a cause of action cannot be established, or that there is a complete defense to the cause
of action. (Code Civ. Proc., § 437c, subds. (o), (p)(2).) If the defendant meets this initial
burden, the burden shifts to the plaintiff to set forth specific facts showing that a triable
issue of material fact exists as to that cause of action or defense. (Id. at subd. (p)(2).)
The defendant’s motion will be granted if the admissible evidence shows there is no
triable issue as to any material fact and the defendant is entitled to judgment as a matter
of law. (Id. at subds. (c), (d); Hayman v. Block (1986) 176 Cal.App.3d 629, 638.)
       We review the decision to grant summary judgment de novo, liberally construing
the evidence and resolving all doubts concerning the evidence in favor of the party
opposing summary judgment. (Superior Dispatch, Inc. v. Insurance Corp. of New York

                                              10
(2010) 181 Cal.App.4th 175, 186 (Superior Dispatch, Inc.).) The trial court’s stated
reasons for granting summary judgment are not binding on us because we review its
ruling, not its rationale. (Ibid.)
                                        DISCUSSION
                                              I*
       Justin claims the trial court erred in ruling that this action is barred by collateral
estoppel. He argues the issues litigated and decided in the personal injury action are
different than the issues asserted in this case. Western Heritage counters that collateral
estoppel applies because both cases involve whether Justin was fully compensated for his
medical expenses, including future medical expenses.
       Collateral estoppel “ ‘ “rests upon the sound policy of limiting litigation by
preventing a party who has had one fair adversary hearing on an issue from again
drawing it into controversy and subjecting the other party to further expense in its
reexamination.” ’ ” (Alpha Mechanical, Heating & Air Conditioning, Inc. v. Travelers
Casualty & Surety Co. of America (2005) 133 Cal.App.4th 1319, 1327.) The party
asserting collateral estoppel bears the burden of showing that (1) the issue sought to be
precluded from relitigation is identical to that decided in a prior proceeding, (2) the issue
was actually litigated in the prior proceeding, (3) the issue was necessarily decided in the
prior proceeding, (4) the decision in the prior proceeding is final and on the merits, and
(5) the party against whom preclusion is sought is the same as, or in privity with, a party
to the prior proceeding. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341; American
Continental Ins. Co. v. American Casualty Co. (2001) 86 Cal.App.4th 929, 943.)
       Regarding whether the issues in this case were litigated and necessarily decided in
the personal injury action, Schaefer/Karpf Productions v. CNA Ins. Companies (1998) 64
Cal.App.4th 1306 (Schaefer) is instructive. Schaefer produced a television special for
children and contracted with The Video Company (TVC) to duplicate the special onto
videotapes, which were sold to Scholastic, Inc. (Schaefer, supra, at p. 1310.) TVC

                                              11
duplicated the special onto videotapes it purchased from Matrix Video Duplication
Corporation (Matrix). (Ibid.) But some of the videotapes already contained
pornographic material that remained on the tapes after duplication. (Ibid.) Scholastic
recalled the videotapes and refused to pay Schaefer. (Schaefer, supra, at p. 1311.)
       Schaefer sued TVC and Matrix for breach of contract, negligence and breach of
warranty (the underlying action). (Schaefer, supra, 64 Cal.App.4th at 1311.) TVC and
Matrix were insured by CNA Insurance Companies (CNA) under commercial general
liability policies, but CNA denied defense and indemnity in the underlying action. (Ibid.)
Schaefer prevailed in his lawsuit and obtained an assignment of claims against CNA from
Matrix. (Ibid.)
       Schaefer then sued CNA to enforce the claims by Matrix against CNA for fraud
and breach of contract. (Schaefer, supra, 64 Cal.App.4th at p. 1311.) CNA asserted
there was no coverage under the policy for Schaefer’s injury because his injury did not
constitute physical injury within the meaning of the policy. (Id. at p. 1312.) Schaefer, in
turn, urged that the coverage issue was decided against CNA in the underlying action
because the trial court found in the prior lawsuit that Schaefer’s loss “ ‘result[ed] from
physical injury to or the loss of use of tangible property, the videotapes . . . .’ ” (Id. at
pp. 1312-1313.)
       The appellate court rejected Schaefer’s contention because, after careful scrutiny
of the complaint in the underlying action, the trial transcript, and the trial court’s ruling
and judgment, it found nothing in the record to show that the issue of coverage under the
CNA policies was adjudicated in the underlying action. (Schaefer, supra, 64 Cal.App.4th
at pp. 1313-1314.) Of significance to our inquiry, the appellate court stated: “Generally
speaking, in an action by an injured party against the party who allegedly caused the
injury the court does not adjudicate the issue of insurance coverage. The only questions
litigated are the defendant’s liability and the amount of damages. The plaintiff is not
concerned with the theory of liability which produces victory; only with procuring the

                                               12
largest possible judgment. Similarly, the defendant is concerned only with avoiding, or at
least minimizing, a judgment for the plaintiff. [Citation] Whether the plaintiff’s loss is
covered by the defendant’s insurance is not germane to the action, and evidence on that
issue would be excluded as irrelevant. [Citation]” (Id. at p. 1313; see Farmer ex rel.
Hansen v. Allstate Ins. Co. (C.D.Cal. 2004) 311 F.Supp.2d 884, 890 [following
Schaefer].) The appellate court held that collateral estoppel did not apply in Schaefer
because one of the prerequisites for collateral estoppel -- whether the issues presented in
the lawsuit against CNA were necessarily decided and actually litigated in the underlying
action -- was not established. (Schaefer, supra, 64 Cal.App.4th at p. 1313.)
       Here, Western Heritage failed to demonstrate that the issues asserted in this action
were raised, actually litigated and necessarily determined in the personal injury action.
Indeed, the record indicates the issues in this case were not litigated in the prior case. In
the personal injury action, Justin alleged negligence by Shasta County, Grass Roots, the
Activities Council and Black Butte Elementary School in failing to instruct, warn and
supervise Justin. Western Heritage was not named as a party in the personal injury action
and no allegations were asserted against it. In this action, however, Justin alleges
Western Heritage owed him direct obligations under the policy and breached those
obligations in denying his request for coverage. (Harper v. Wausau Ins. Co., supra, 56
Cal.App.4th at pp. 1089-1090 [the insurer owes a direct obligation to the beneficiaries of
a medical payment provision and this obligation is independent of its obligation to pay
sums of money as damages under the liability provision of the insurance policy].) The
issues in this case were not pleaded or litigated in the personal injury action. (7 Witkin,
Cal. Procedure (5th ed. 2008) Judgment, § 419, pp. 1064-1065 [a prior judgment is not
collateral estoppel on issues which were not raised in the prior action].) Although both
actions involve a prayer for medical expenses, the specific issues asserted are different.
       When Justin’s attorney broached the subject of Western Heritage’s bad faith
during the personal injury action, the attorney for the Activities Council expressly

                                              13
disclaimed authority to speak for Western Heritage or to speak on the issue of insurance
coverage. Moreover, although a release of claims in favor of Western Heritage was
solicited during settlement discussions in the personal injury action, the settlement
ultimately did not include Western Heritage. The full and fair compensation that Kelly
referenced in the petition to approve compromise of minor’s claim pertained to the
specific issues pleaded in the personal injury action, not to issues pertaining to Western
Heritage that were neither pleaded, litigated or released.
       Western Heritage cites Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788,
797 (Boeken), but that case is inapposite because it involved the aspect of res judicata
known as claim preclusion, which is distinct from collateral estoppel (issue preclusion).
(Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 866-867.) Claim preclusion
prohibits a second lawsuit between the same parties on the same cause of action.
(Boeken, supra, 48 Cal.4th at p. 797.) Collateral estoppel bars a subsequent lawsuit on a
different cause of action if the second lawsuit involves an issue actually litigated and
determined in a prior proceeding. (Ibid.) In Boeken, the two lawsuits at issue were filed
against the same defendant and involved the same primary right by the plaintiff, the right
not to be wrongfully deprived of spousal companionship and affection. (Id. at pp. 791-
792, 798-800, 804.)
       Here, however, the summary judgment motion by Western Heritage was based on
collateral estoppel, not claim preclusion. Western Heritage does not assert that the
personal injury action and this action involve the same defendants. Western Heritage
also does not argue that the two actions involve the same primary right or cause of action.
Instead, it argued in the trial court, and it contends on appeal, that Justin seeks to
relitigate an issue decided in the personal injury action. Accordingly, Boeken is not
controlling.
       The issues asserted in this action were not litigated or decided in the personal
injury action, and collateral estoppel does not bar the present action.

                                              14
                                                II
          Justin contends the trial court erred in concluding that an award in this action
based on the medical payment provision would result in impermissible double recovery.
Justin argues there would be no double recovery because Western Heritage owed him a
separate and direct duty under the medical payment provision, a duty distinct from the
duty owed to its insured, the Activities Council, under the liability provision of the
policy.
          The California Supreme Court and the appellate courts in this state have not
addressed the precise issue presented: whether an injured plaintiff who receives some
payment for medical expenses from a tortfeasor’s insurer under the medical payment
provision of an insurance policy, and who also settles a personal injury lawsuit against
the tortfeasor and receives payment from the tortfeasor’s insurer under the liability
provision of the insurance policy, is thereafter precluded from separately suing the
tortfeasor’s insurer based on its alleged breach of direct duties owed to the plaintiff under
the medical payment provision of the policy.
          Out-of-state decisions are split on the issue. Many courts have held that the
subsequent action is not barred. (E.g., Beschnett v. Farmers Equitable Ins. Co. (1966)
275 Minn. 328, 330 [146 N.W.2d 861, 863] [subsequent action is not barred where the
insurer was not a party to the tort action and plaintiffs did not release claims against the
insurer]; Moorman v. Nationwide Mut. Ins. Co. (1966) 207 Va. 244, 247-248 [148 S.E.2d
874, 876] [plaintiff is entitled to separate recovery under medical payment provision];
Blocker v. Sterling (1968) 251 Md. 55, 57-62 [246 A.2d 226, 228-231] [same]; Severson
v. Milwaukee Auto. Ins. Co. (1953) 265 Wis. 488, 491-493 [61 N.W.2d 872, 874-875]
[subsequent action is not barred because medical payment provision is a separate
contract].) But some courts have precluded the second action. (E.g., Almond v. Cigna
Property & Casualty Ins. Co. (1995) 322 Ark. 268, 270-271 [908 S.W.2d 93, 94-95]
[claimant cannot recover more than once for the same injury]; Tart v. Register (1962) 257

                                                15
N.C. 161, 172-174 [125 S.E.2d 754, 763-764] [it would be inequitable for plaintiff to
recover twice against the insurer, and the insurer and the tortfeasor did not intend double
recovery for medical expenses]; Gunter v. Lord (1962) 242 La. 943, 948, 954-956 [140
So.2d 11, 13, 15-16] [similar holding].)
       We conclude the present action would not lead to an impermissible double
recovery. An insurer’s obligation to indemnify its insured under the liability provision of
an insurance policy is separate and distinct from its obligation to pay for medical
expenses under a medical payment provision of the same policy. (Harper v. Wausau Ins.
Co., supra, 56 Cal.App.4th at pp. 1088-1090 [involving medical payment coverage
language identical to that in this case].) As one commentator noted, a medical payment
provision is divisible from the remainder of the insurance policy and creates a direct
liability on the part of the insurer to an injured person. (Id. at p. 1090 [citing 8A
Appleman, Insurance Law and Practice (rev. ed. 1981) § 4902, pp. 228-230].) The
obligation of the insurer under a medical payment provision is not dependent on the
negligence of the insured or the insurer’s obligation to pay damages under the liability
provisions of the policy. (Harper v. Wausau Ins. Co., supra, 56 Cal.App.4th at p. 1090.)
       The present action is based on the alleged breach of the obligations Western
Heritage owed to Justin under the medical payment provision of the policy. Although
Justin received some payment under the medical payment provision, he is now claiming
that Western Heritage wrongfully denied him additional coverage. The record does not
show that Justin obtained any recovery for Western Heritage’s alleged wrongful denial of
medical payment benefits.7 Instead, the settlement Justin obtained in the personal injury



7 We deny Justin’s request to augment the appellate record to include the order granting
Justin’s motion to tax costs filed in the trial court on November 9, 2010. That order was
submitted on a point raised for the first time in the reply brief. We decline to consider a
point raised for the first time in a reply brief where Justin has not shown good cause for
the failure to present the argument in his opening brief. (Trustees of Capital Wholesale

                                              16
action was compensation for the alleged negligence by the defendants in that case, which
included the Activities Council but did not include its insurer, Western Heritage. By
satisfying the settlement in the personal injury action, Western Heritage performed its
obligation to the Activities Council under the liability provision of the policy, an
obligation that was separate and divisible from the duty under the medical payment
provision.
       Moreover, no language in the policy evinces the intent that payment under the
liability provision extinguishes Western Heritage’s obligation under the medical payment
provision. For this reason, Tart v. Register, supra, 125 S.E.2d at pp. 763-764 and Gunter
v. Lord, supra, 140 So.2d at pp. 13, 15-16 are distinguishable.
       Although the parties focus on direct duty and double recovery, we are also aware
of a 1970 decision by the appellate division of the Santa Clara Superior Court, which
addressed this question by applying the collateral source rule. In Jones v. California
Casualty Indem. Exch. (1970) 13 Cal.App.3d Supp. 1 (Jones), the court held that a
plaintiff in a dog bite case who obtained a tort judgment against the dog’s owners,
including an award of medical expenses, and then obtained satisfaction of the judgment
from the liability provision of the owners’ insurance policy, could not subsequently sue
the owners’ insurer under the medical payment provision of that same policy. (Jones,
supra, 13 Cal.App.3d Supp. at pp. 3-6.)
       The court in Jones applied the collateral source rule, which provides that “ ‘if an
injured party receives some compensation for his injuries from a source wholly
independent of the tortfeasor, such payment should not be deducted from the damages
which the plaintiff would otherwise collect from the tortfeasor.’ ” (Howell v. Hamilton
Meats & Provisions, Inc. (2011) 52 Cal.4th 541, 551, quoting Helfend v. Southern Cal.



Electric etc. Fund v. Shearson Lehman Brothers, Inc. (1990) 221 Cal.App.3d 617, 627.)
In any event, that order has no bearing on our discussion.

                                             17
Rapid Transit Dist. (1970) 2 Cal.3d 1, 6.) A typical example is where a plaintiff procures
insurance coverage for a loss caused by a tortfeasor and the plaintiff’s insurer pays the
plaintiff for the loss. (Dodds v. Bucknum (1963) 214 Cal.App.2d 206, 214.) The
plaintiff’s insurance is wholly independent from, and collateral to, the tortfeasor, and the
tortfeasor is not permitted to benefit from the plaintiff’s prudence. (Helfend v. Southern
Cal. Rapid Transit Dist., supra, 2 Cal.3d at pp. 6, 10.) But where the tortfeasor maintains
his own insurance coverage to cover the plaintiff’s loss, such insurance is not wholly
independent from, and collateral to, the tortfeasor, and those insurance payments are
deducted from the plaintiff’s recovery. (Dodds v. Bucknum, supra, 214 Cal.App.2d at p.
213.)
        Based on this distinction between insurance coverage maintained by a plaintiff as
coverage for the plaintiff’s loss (a source collateral to the alleged wrongdoer) and
insurance coverage maintained by the alleged wrongdoer as coverage for the alleged
wrongdoer’s liability (a source not collateral to the wrongdoer), the court in Jones
concluded that the plaintiff could not separately recover against the insurer under the
medical payment provision of the insurance policy because the policy was not “wholly
independent” of the owners who maintained the policy, and hence was not collateral to
them. (Jones, supra, 13 Cal.App.3d Supp. at pp. 3-6.)
        We disagree with the analysis in Jones. The plaintiff in Jones first brought a
personal injury action against the dog owners, alleging that the dog owners were the
wrongdoers. (Jones, supra, 13 Cal.App.3d Supp. at p. 3.) To the extent the owners
maintained liability insurance to cover the tort judgment against them, that funding
source was not collateral to the alleged wrongdoers. But plaintiff then brought a separate
lawsuit against the insurer alleging that the insurer was the wrongdoer. The policy at
issue was not maintained by the insurer to provide coverage for its wrongdoing, and
hence the insurance policy was collateral to the alleged wrongdoer in that case.



                                             18
       Here, Justin first brought a personal injury action against the Activities Council,
alleging that the Activities Council was the wrongdoer. The Activities Council
maintained liability insurance for that purpose, and that funding source was not collateral
to the Activities Council, the alleged wrongdoer. But plaintiff now brings a separate
lawsuit against the insurer, Western Heritage, alleging that Western Heritage is the
wrongdoer. The policy at issue was not maintained by Western Heritage to provide
coverage for its wrongdoing, and hence the insurance policy is collateral to the alleged
wrongdoer. The collateral source rule does not bar Justin’s present action.
                                            III*
       Justin next contends the trial court erred in concluding that Western Heritage is
not equitably estopped from asserting the one-year deadline in the insurance policy.
       The applicable insurance policy provides medical payment coverage if the
expenses are incurred and reported to Western Heritage within one year of the date of the
accident. There is no dispute in this case that the provision is valid. (Spray, Gould &
Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1267 (Spray, Gould
& Bowers) [limitation provisions in insurance policies are generally valid].) Justin
requested medical payment coverage for a consultation with a pediatric specialist more
than one year after the accident. Under the policy language, even if additional medical
expenses had been incurred,8 Justin’s request for coverage was properly denied unless, as
Justin contends, Western Heritage was equitably estopped from relying on the one-year
time limit.




8 Western Heritage points out that Justin was required to actually incur a claimed
medical expense as a condition precedent to coverage under the medical payment
provision, and Western Heritage was entitled to deny medical payment benefits because
Justin did not satisfy this condition to payment. As we explain, however, there is a
triable issue of material fact regarding whether Justin would have incurred additional
expenses if Western Heritage had informed him of the deadline.

                                             19
       Equitable estoppel is a remedial judicial doctrine applied to ensure fairness and to
do equity. (Spray, Gould & Bowers, supra, 71 Cal.App.4th at p. 1270.) An insurer may
be equitably estopped from asserting a contractual time limit as a defense if it had a duty
to inform the insured of the time limit, its failure to do so caused the insured to refrain
from filing a timely claim, and the insured’s reliance on the insurer’s conduct was
reasonable. (Superior Dispatch, Inc., supra, 181 Cal.App.4th at p. 186; Spray, Gould &
Bowers, supra, 71 Cal.App.4th at pp. 1267-1268.)
       Justin argues Western Heritage was required to give him notice of the contractual
time limit applicable to his claim pursuant to sections 2695.4, subdivision (a), and
2695.7, subdivision (f), of title 10 of the California Code of Regulations (hereafter
“section 2695.4(a)” and “section 2695.7(f)”). Sections 2695.4(a) and 2695.7(f) are part
of the Fair Claims Settlement Practices Regulations (Cal. Code Regs., tit. 10, §§ 2695.1-
2695.17) (Regulations) which were promulgated by the Insurance Commissioner to
define minimum standards for the settlement of claims. (Ins. Code, §§ 790, 790.10; Cal.
Code Regs., tit. 10, § 2695.1, subd. (a).) In 2001, section 2695.7(f) provided, in pertinent
part, “[e]xcept where a claim has been settled by payment, every insurer shall provide
written notice of any statute of limitation or other time period requirement upon which
the insurer may rely to deny a timely claim. Such notice shall be given to the claimant
not less than sixty (60) days prior to the expiration date; except, if notice of claim is first
received by the insurer within that sixty days, then notice of the expiration date must be
given to the claimant immediately.”9 (Cal. Code Regs., tit. 10, § 2695.7(f), Register 97,


9 Section 2695.7(f) currently provides, “Except where a claim has been settled by
payment, every insurer shall provide written notice of any statute of limitation or other
time period requirement upon which the insurer may rely to deny a claim. Such notice
shall be given to the claimant not less than sixty (60) days prior to the expiration date;
except, if notice of claim is first received by the insurer within that sixty days, then notice
of the expiration date must be given to the claimant immediately. . . . This subsection
shall not apply to a claimant represented by counsel on the claim matter.”

                                              20
Nos. 1-2 (Jan. 10, 1997), p. 752.2(b).) Section 2695.7(f) did not apply to a claimant
represented by counsel on the claim matter. (Id. at p. 752.2(c).)
       Western Heritage did not violate section 2695.7(f) with regard to any claim
relating to services Justin received during the period May 2001 to July 2001 because such
claims were settled by payment. (Cal. Code Regs., tit. 10, § 2695.7(f), Register 97, Nos.
1-2 (Jan. 10, 1997), p. 752.2(b).) As to any claim for additional medical payment
coverage permitting Justin to consult with a pediatric specialist, section 2695.7(f) did not
apply because Justin was represented by counsel when he requested this additional
coverage. (Id. at p. 752.2(c).) Justin has not established that Western Heritage is
estopped from asserting the one-year deadline based on section 2695.7(f).
       The other asserted regulation, section 2695.4(a), requires that an insurer disclose
all applicable time limits in the insurance policy to a claimant seeking medical payment
coverage.10 (Cal. Code Regs., tit. 10, § 2695.4(a), Register 97, Nos. 1-2 (Jan. 10, 1997),
p. 752.2(a); Spray, Gould & Bowers, supra, 71 Cal.App.4th at p. 1269 [section 2695.4(a)
imposes on insurers an unmistakable duty to advise claimants of applicable claim time
limits]; Royal Indemnity Co. v. United Enterprises, Inc. (2008) 162 Cal.App.4th 194, 206,
fn. 5 [medical payment claims are first party claims]; Nager v. Allstate Ins. Co., supra, 83
Cal.App.4th at p. 289 [medical payment provisions provide first party coverage].) Unlike
section 2695.7(f), there is no exception to the disclosure duty imposed by section
2695.4(a) for claimants represented by counsel. (Cal. Code Regs., tit. 10, § 2695.4(a),



10 Section 2695.4(a) states, “Every insurer shall disclose to a first party claimant or
beneficiary, all benefits, coverage, time limits or other provisions of any insurance policy
issued by that insurer that may apply to the claim presented by the claimant. When
additional benefits might reasonably be payable under an insured’s policy upon receipt of
additional proofs of claim, the insurer shall immediately communicate this fact to the
insured and cooperate with and assist the insured in determining the extent of the
insurer’s additional liability.” (Cal. Code Regs., tit. 10, § 2695.4(a), Register 97, Nos. 1-
2 (Jan. 10, 1997), p. 752.2(a).)

                                             21
Register 97, Nos. 1-2 (Jan. 10, 1997), p. 752.2(a); Superior Dispatch, Inc., supra, 181
Cal.App.4th at p. 190.)
       Relying on SEMX Corp. v. Federal Ins. Co. (S.D.Cal. 2005) 398 F.Supp.2d 1103
(SEMX Corp.), Western Heritage maintains that sections 2695.4(a) and 2695.7(f) did not
require it to provide notice of the contractual time limit for medical payment claims
because it had accepted coverage under the medical payment provision and Justin settled
his claims for medical expenses in the personal injury action. But the facts in this case
are distinguishable from those in SEMX Corp.
       In SEMX Corp., an insured settled a claim for lost income with its insurer; the
insurer paid less than the full amount of the loss as determined by the insurer’s retained
accountant. (SEMX Corp., supra, 398 F.Supp.2d at pp. 1106-1107, 1109, fn. 2.) In a bad
faith lawsuit that followed, the district court held that section 2695.7(f), not section
2695.4(a), controlled the case because the parties settled the lost income claim by
payment. (Id. at p. 1112.) The court determined that under section 2695.7(f) the insurer
was not required to provide notice of the contractual limitations provision because it had
settled the claim its insured made under the policy. (Ibid.)
       Unlike the lost income claim in SEMX Corp., Justin’s underlying claim against
Western Heritage for additional medical payment coverage -- the claim upon which the
present breach action is based -- was not settled or paid. Western Heritage denied
Justin’s request for additional coverage. As we have explained, the settlement in the
personal injury action was not a settlement of any claim made against Western Heritage.
Hence, reliance upon SEMX Corp. is misplaced.
       Western Heritage was required to provide Justin with actual notice of the one-year
time limit for making additional claims. (Cal. Code Regs., tit. 10, § 2695.4(a), Register
97, Nos. 1-2 (Jan. 10, 1997), p. 752.2(a); Sarchett v. Blue Shield of California (1987) 43
Cal.3d 1, 14-15; Spray, Gould & Bowers, supra, 71 Cal.App.4th at pp. 1272-1273.) It is
undisputed that Western Heritage did not inform Justin of the one-year deadline.

                                              22
       Although Western Heritage was required to inform Justin of the one-year deadline,
Justin must also establish the other elements of equitable estoppel: that Western
Heritage’s omission caused Justin to refrain from filing a timely claim, and that Justin’s
reliance was reasonable. (Superior Dispatch, Inc., supra, 181 Cal.App.4th at p. 186;
Spray, Gould & Bowers, supra, 71 Cal.App.4th at pp. 1267-1268.) Western Heritage
argues Justin cannot establish these essential elements.
       We conclude, however, that there are triable issues of material fact as to these
elements. An insurer’s failure to disclose is a cause of a claimant’s injury if the claimant
would have taken action to avoid injury had the claimant known the omitted fact.
(Superior Dispatch, Inc., supra, 181 Cal.App.4th at p. 187.) The insurer need not intend
to deceive the insured to be subject to equitable estoppel. (Id. at p. 186.) Rather,
estoppel may be predicated on the insurer’s failure to speak when it is bound to do so.
(City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 488.)
       Justin presented evidence that he, through his guardian ad litem, had no actual
knowledge of the one-year deadline in the policy. And Kelly declared that had she
known of the one-year time limit she would have incurred additional medical expenses
before the one-year period expired because Justin continued to experience pain in his
back. This evidence is sufficient to create triable issues of fact.
                                             IV*
       Justin also assigns error to the trial court’s order sustaining evidentiary objections
to paragraphs 2(a), 2(c) and 2(d) of the declaration of Frank T. Glynn. It is unnecessary




                                              23
to discuss these assignments of error, however, because we conclude reversal is required
irrespective of the statements in the challenged declaration.
                                      DISPOSITION
       The judgment is reversed. Justin shall recover his costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(2).)



                                                                MAURO                 , J.


We concur:


             RAYE                   , P. J.


             NICHOLSON              , J.




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