In Mark Alan Jones v. IDS Property Cas. Ins. Co., 27 Cal.App.5th 625 (September 25, 2018), the California Third District Court of Appeal affirmed the trial court's entry of judgment in favor of IDS Property Casualty Insurance Company ("IDS") in connection with a bad faith lawsuit arising out of the insured's contention that an automobile policy per occurrence limit of $500,000.00 applied to an accident, rather than a $250,000 per person limit based on the independent claim of loss of consortium asserted by the spouse of the plaintiff injured in an automobile accident. The IDS automobile policy afforded coverage to Janet Buhler and Richard Buhler ("Buhlers"). The policy provided coverage of $250,000 for bodily injury for each person and $500,000 for each occurrence. The policy set forth the limits of liability for bodily injury as follows:

  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 lability for each person, the bodily injury liability limited 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 the 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.

As a result of the accident, IDS paid plaintiffs, Mark Alan Jones and Melanie Jones (the "Joneses") the per person limit of $250,000. In response, the Joneses contended that an additional $250,000 per person limit applied to Melanie Jones' claim for loss of consortium. Hence the total amount of limits that should have been paid was the $500,000 per occurrence limit.

Subsequently, the Joneses filed a declaratory relief action against IDS and the Buhlers seeking an additional $250,000.00 payment under the IDS policy. In response, IDS moved for summary judgment. It argued that a single per person limit applied to both Mark's injuries and Melanie's loss of consortium claim resulting therefrom. Relying on Abellon v. Hartford Insurance Ins. Co. (1985) 167 Cal.App.3d 21, the trial court denied IDS' motion. In response, the Buhlers filed for bankruptcy and the bankruptcy trustee filed a cross-complaint against IDS for failure to defend, breach of the implied covenant of good faith and fair dealing and breach of contract. In addition, the Joneses filed an amended complaint alleging fraud and negligent misrepresentation.

On the first day of jury trial, the parties agreed that the judge could rule on the declaratory relief cause of action and certify the ruling for appeal pursuant Code of Civil Procedure section 166.1. Subsequently, the court ruled in favor of IDS and found that Melanie's claim for loss of consortium was included in the policy's per person limit for bodily injury of $250,000. The trial court relied on the Court of Appeal decisions in United Services Automobile Assn. v. Warner (1976) 64 Cal.App.3d 957 ("Warner") and Mercury Ins. Co. v. Ayala (2004) 116 Cal.App.4th 1198 ("Ayala").

As a result of the trial court's judgment in favor of IDS, the Buhlers and Joneses filed an appeal.

In affirming the trial court's entry of judgment, the Court of Appeal held that the language in the IDS policy was unambiguous and limited the Joneses' recovery to a total of $250,000. The Court stated as follows:

The Joneses do not otherwise explain how the policy provision is ambiguous.

The Buhlers contend the policy can reasonably be read to apply the per person limit only to amounts paid to one person. As we have set forth, the per person policy limit reads: "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." The Buhlers read this language so the phrase "to one person in one occurrence" modifies the "maximum we will pay" rather than the closer term "bodily injury." This reading results in the $250,000 limit's application to damage amounts to be paid to one person, rather than applying the limit to damages derived from bodily injury to one person. The Buhlers argue that because Mark and Melanie Jones are two people and thus the payment for damages will be from IDS to more than one person, the higher per occurrence limit applies. They assert 'a reasonable insured would expect that the 'per person' limitation in a policy would limit a single claimant's recovery, not multiple claimants.

This interpretation is contrary to the express language of the policy that the per person limit applies to damages for bodily injury to one person, "regardless of the number of . . . claims, claimants . . . ." Thus, the Buhlers' interpretation is not reasonable. (Benedek v. PLC Santa Monica (2002) 104 Cal.App.4th 1351, 1358 [interpretation that is contrary to express language is not semantically reasonable]. Further, any time loss of consortium is at issue, there are two person damaged, the person suffering bodily injury and the spouse. If a claim for loss of consortium always triggered then per occurrence limit, there would be no need to define damages for bodily injury to include loss of consortium. "We must give significance to every word of a contract, when possible, and avoid an interpretation that renders a word surplusage." (In re Tobacco Cases I (2010) 186 Cal.App.,4th 42, 49.)

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 out of 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, supra, 64 Cal.App.3d at page 961, Ball, supra, 127 Cal.App.3rd at page 571, Bash, supra, 211 CalApp.3d at page 435, and Ayala, supra, 116 Cal.App.4th at page 1198.

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