Filed 10/28/13 McAlister v. Mercury Ins. Co. CA2
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                DIVISION THREE



HARVARD Y. MCALISTER, JR. et al.,                                         B242537

         Plaintiffs and Appellants,                                       (Los Angeles County
                                                                          Super. Ct. No. BC472479)
         v.

MERCURY INSURANCE COMPANY,

         Defendant and Respondent.




         APPEAL from a judgment of the Superior Court of Los Angeles County,

William F. Highberger, Judge. Affirmed.

         Law Office of Jonathan Weiss, Jonathan Weiss; Law Office of

Steven W. O‟Reilly and Steven W. O‟Reilly for Plaintiffs and Appellants.

         Barger & Wolen, Steven H. Weinstein, Spencer Y. Kook and Munish Dayal

for Defendant and Respondent.



                                __________________________________
       Plaintiffs and appellants Harvard Y. McAlister, Jr. and Ramona L. McAlister

(plaintiffs) appeal a judgment in favor of defendant and respondent Mercury Insurance

Company (Mercury) following the sustaining of Mercury‟s demurrer to the original

complaint without leave to amend.

       The essential issue presented is whether plaintiffs‟ action against Mercury is

barred by the auto policy‟s contractual lawsuit limitations (CLL) provision, which bars

lawsuits for breach of the med-pay agreement unless filed within two years of the

accident date.

       The pleading on its face shows the action is barred by the two-year CLL provision.

Therefore, the judgment is affirmed.

                     FACTUAL AND PROCEDURAL BACKGROUND

       1.        Pleadings

       On October 31, 2011, plaintiffs filed suit against Mercury, alleging in

pertinent part:

       Plaintiffs purchased a Mercury auto insurance policy, including $5,000 in medical

expense coverage (med-pay), covering the period July 4, 2006 through January 4, 2007.

On December 14, 2006, plaintiffs were involved in an accident while driving their car.

Both were injured and both incurred reasonable and necessary medical expenses within a

year of the accident date. Plaintiffs “reported the accident to Mercury Insurance within

24 hours of its occurrence . . . . ”




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       Nearly three years after the accident, on October 22, 2009, plaintiffs submitted

$5,000 in medical bills to Mercury; $3,000 was incurred in the first year after the

accident and $2,000 was incurred after the one-year period.

       In a letter dated October 30, 2009, Mercury denied the claim for med-pay benefits

on the ground the bills were submitted more than two years after the accident. Mercury

cited the following policy language: “ „No suit or action on coverage C shall be

sustainable in any Court of law or equity unless commenced within two years following

the date of accident.‟ ”

       Plaintiffs‟ complaint disputed Mercury‟s position, alleging: “The cited language

clearly and unambiguously refers to the time for filing a lawsuit regarding med-pay.

The policy says nothing about the time for mailing or otherwise presenting medical

expenses for payment or reimbursement.”

       The complaint also included class action allegations, and pled causes of action for

breach of contract, breach of the implied covenant of good faith and fair dealing, unfair

competition (Bus. & Prof. Code, § 17200 et seq.), and declaratory relief.

       2.     Mercury’s Demurrer

       Mercury demurred, asserting the complaint was barred in its entirety by the two-

year CLL. Specifically, under the policy, Mercury agreed to pay for certain medical

expenses “incurred within one year of the date of the accident” up to $5,000. The policy

further provided: “No suit or action on Coverage C [medical expenses] shall be

sustainable in any court of law or equity unless commenced within two years following

the date of accident.”


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       Here, the lawsuit for med-pay benefits was commenced long after the time

permitted by the policy. The accident occurred on December 14, 2006. Within one year

of the accident, plaintiffs allegedly incurred $3,000 in medical expenses. For unknown

reasons, plaintiffs waited nearly two more years, until October 22, 2009, to submit a

claim for med-pay benefits. After Mercury denied the claim, plaintiffs waited two more

years before commencing the instant lawsuit. In other words, this lawsuit was brought

nearly five years after the accident and nearly three years after the expiration of the

deadline for filing suit to recover med-pay benefits.

       3.     Plaintiffs’ Opposition

       Plaintiffs argued the policy failed to advise them in conspicuous and unequivocal

language as to when to send in their medical bills. Therefore, Mercury‟s denial of

benefits was wrongful and its CLL provision was unenforceable.

       Plaintiffs relied on an insurance regulation, 10 California Code of Regulations

section 2695.4 (Regulation 2695.4), which provides in pertinent part: “(a) 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. . . . . [¶] . . . [¶] (d) Except where a time limit is

specified in the policy, no insurer shall require a first party claimant under a policy to

give notification of a claim or proof of claim within a specified time.”

       Plaintiffs argued Mercury was equitably estopped from asserting the two-year

CLL provision because the policy failed to specify a deadline for submitting a proof of

claim to the insurer. Further, Mercury remained silent despite the “ „affirmative duty to


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speak‟ ” imposed by the regulations, and therefore was precluded from using the

contractual limitations provision.

       4.     Trial Court’s Ruling

       On May 8, 2012, the matter came on for hearing. The trial court sustained

Mercury‟s demurrer without leave to amend. It found the policy‟s CLL provision, which

barred suit for med-pay benefits unless commenced within two years of the date of the

accident, “is reasonable and thus enforceable, contrary to plaintiffs‟ legal contention.

The Court is satisfied that the policy‟s disclosure of the time limit is quite clear enough

and that there is no basis for the alleged equitable estoppel. Since plaintiffs had not

claimed until after the contractual limitations period had run, there was no occasion for

the carrier to supplement the disclosures in the policy‟s text with further disclosures when

a claim is first presented.”

       Plaintiffs filed a timely notice of appeal from the judgment.

                                     CONTENTIONS

       Plaintiffs contend: the trial court erred in holding the CLL provision necessarily

barred their claim; Mercury‟s failure to comply with insurance regulations equitably

estops it from relying on the CLL provision; the CLL provision is so unreasonable as to

be unenforceable; the CLL is unconscionable and therefore unenforceable; and if factual

allegations are insufficient, leave to amend should be given.




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                                      DISCUSSION

       1.     Standard of Appellate Review

       In determining whether a plaintiff has properly stated a claim for relief, “our

standard of review is clear: „ “We treat the demurrer as admitting all material facts

properly pleaded, but not contentions, deductions or conclusions of fact or law.

[Citation.] We also consider matters which may be judicially noticed.” [Citation.]

Further, we give the complaint a reasonable interpretation, reading it as a whole and its

parts in their context. [Citation.] When a demurrer is sustained, we determine whether

the complaint states facts sufficient to constitute a cause of action. [Citation.] And when

it is sustained without leave to amend, we decide whether there is a reasonable possibility

that the defect can be cured by amendment: if it can be, the trial court has abused its

discretion and we reverse; if not, there has been no abuse of discretion and we affirm.

[Citations.] The burden of proving such reasonable possibility is squarely on the

plaintiff.‟ [Citations.]” (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126,

italics added.) Our review is de novo. (Ibid.)

       2.     Trial Court Properly Sustained Demurrer Without Leave to
              Amend Because Plaintiffs Failed to File Suit to Recover
              Med-pay Benefits “Within Two Years Following the Date of Accident,”
              As Required by the Policy

              a.     Plaintiffs reliance on Regulation 2695.4 is misplaced;
                     until such time as a claim is presented, the duty to notify
                     the claimant of applicable time limits is not triggered

       Plaintiffs contend Regulation 2695.4 required Mercury to give notice of the proof

of claim deadline before enforcing it, and because Mercury did not disclose a proof of



                                             6
claim limitation period, it is barred from enforcing the proof of claim deadline. As

explained below, the argument is unavailing.

       To reiterate, Regulation 2695.4 states in pertinent part: “(a) 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.” (Italics added.)

       Plaintiffs characterize their notification to Mercury, within 24 hours of the

accident, that they had been involved in an accident, as a “claim,” so as to trigger

Regulation 2695.4‟s duty on the part of the insurer to disclose to a claimant all time limits

that may apply to the claim presented by the claimant. Thus, the discrete issue presented

is whether the plaintiffs‟ initial notification to Mercury that they had been involved in an

accident constituted a “claim.”

       In “both its ordinary meaning and in the interpretation given to it by other courts

in similar circumstances, a claim is a demand for something as a right or as

due. . . . A claim is the assertion of a liability of the party, demanding that the party

perform some service or pay some money. [Citation.] A claim is a demand or challenge

of something as a right and asserts the liability of the party from whom a service or sum

of money is requested. [Citation.]” (Abifadel v. Cigna Ins. Co. (1992) 8 Cal.App.4th

145, 160.)

       Clearly, plaintiffs‟ notification to Mercury, within 24 hours of the accident, that

they had been involved in an accident, fell far short of a “claim.” Therefore, Mercury at




                                               7
that juncture was not required by Regulation 2695.4 to advise the plaintiffs of any

applicable time limits.

              b.        Action is barred on its face by plaintiffs’ failure to file suit
                        within two years of the accident

       As indicated, the date of the accident was December 14, 2006. The complaint

discloses it was not until October 22, 2009, that plaintiffs submitted their medical bills to

Mercury. The CLL provision in the policy unambiguously states: “No suit or action on

Coverage C [expenses for medical services] shall be sustainable in any court of law or

equity unless commenced within two years following the date of accident.” (Italics

added.) Plaintiffs commenced this action on October 31, 2011, nearly five years after the

date of the accident.

       In an attempt to overcome the two year CLL provision, plaintiffs argue said

limitations provision is unreasonable, shows imposition or undue advantage, is

unconscionable, and therefore is unenforceable.

       Case law is to the contrary. For example, CBS Broadcasting Inc. v. Fireman’s

Fund Ins. Co. (1999) 70 Cal.App.4th 1075, found there was “nothing inherently

unreasonable” about a one-year contractual limitations period (id. at p. 1084) which was

clearly and conspicuously set forth in the policy. (Id. at p. 1086.)

       Contractual limitations periods have “long been recognized as valid in California.

As is stated in Fageol T. & C. Co. v. Pacific Indemnity Co. (1941) 18 Cal.2d 748, 753

[117 P.2d 669], of a policy provision requesting action to be commenced within

12 months after the happening of the loss: „Such a covenant shortening the period of



                                                 8
limitations is a valid provision of an insurance contract and cannot be ignored with

impunity as long as the limitation is not so unreasonable as to show imposition or undue

advantage. One year was not an unfair period of limitation. [Citations.]‟ [Citations.]

We accordingly hold that the shortened time-for-commencement-of-suit provision in the

policies in question is valid and governs the time within which suit has to be commenced

in this case.” (C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055,

1064.)

         Given that case law has upheld the validity of a one-year contractual limitations

period, the instant two-year CLL provision is clearly enforceable. Because plaintiffs

failed to file suit within two years of the accident, the action is barred.

                c.     No Basis for Leave to Amend

         Plaintiffs contend that in the event their factual allegations are insufficient, they

should be granted leave to amend. The burden of showing a reasonable possibility that

the pleading could be amended “is squarely on the plaintiff.” (Zelig v. County of Los

Angeles, supra, 27 Cal.4th at p. 1126.) Here, plaintiffs do not specify in what manner

they could amend their pleading to state a cause of action. Therefore, leave to amend is

not warranted.




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                                  DISPOSITION

    The judgment is affirmed. The parties shall bear their respective costs on appeal.



    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




                                                                  KLEIN, P. J.




WE CONCUR:




          CROSKEY, J.




          ALDRICH, J.




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