Tania Molinar v. 21st Century Insurance Company

(May 2024) - In Molinar v. 21st Century Ins. Co., 99 Cal.App.5th 1228 (February 26, 2024), the California Fourth District Court of Appeal reversed the entry of summary judgment in favor of 21st Century Insurance Company (21st Century) and found that it failed to properly provide notice of cancellation of an automobile policy issued to plaintiff Tania Molinar (“Tania”). Tania’s parents, Silvia Escarcega and Alberto Molinar, were identified as the named insureds on the 21st Century automobile policy. However, Tania was also specifically identified as an insured by name under the policy and her automobile was specifically scheduled as an insured vehicle under such policy. Due to an error in connection with the automatic debiting of their bank account, Escarcega and Molinar failed to pay a monthly premium charged for the 21st Century policy. As such, 21st Century sent a notice of cancellation to Escarcega and Molinar, but did not send a notice of cancellation to Tania.  

Four days after the policy was cancelled, Tania was involved in an automobile accident while she was driving the automobile scheduled by the 21st Century policy. As a result of the accident, the passenger in Tania’s automobile at the time of the accident died and the driver of the other automobile involved in the accident was seriously injured. Subsequently, the other driver filed a lawsuit against Tania alleging damages exceeding $7.5 million. 21st Century denied Tania’s tender of the claim based on the cancellation of the policy. Thereafter, Tania filed a lawsuit against 21st Century for breach of contract and bad faith. Subsequently, the trial court granted a summary judgment filed by 21st Century arguing that its automobile policy was properly cancelled four days before the accident.

Relying on the holding in Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, the Court of Appeal reversed the trial court’s decision and found that 21st Century’s failure to mail a notice of cancellation to Tania obviated the cancellation of the automobile policy. The Court of Appeal reasoned as follows:

We conclude that the reasoning of Kotlar applies here. The statute governing notice of cancellation of an automobile insurance policy also requires notice to "the named insured." (§ 662.  subd. (a).) "Where the same term or phrase is used in a similar manner in two related statutes concerning the same subject, the same meaning should be attributed to the term in both statutes unless countervailing indications require otherwise." (Dieckmann v. Superior Court (1985) 175 Cal.App.3d 345, 356 (220 Cal. Rptr.  602).) We discern no reason the statutory phrase "the named insured" would carry differing meanings for these two parallel Insurance Code provisions governing notice of cancellation. Consistent with Kotlar, we therefore conclude that the phrase "the named insured" as used in section 662, subdivision (a), refers to "all insureds named in the policy," not just the policyholder. (Kotlar, supra, 83 Cal.App.4th at p. 1121.)

21st Century admits that Tania was an “insured" under the policy. There is also no dispute that Tania was identified by name on the declarations page, and 21st Century knew she was the registered owner of the covered Mazda. Under the reasoning of Kotlar, therefore, she qualifies as an "insured[] named in the policy" who was entitled to notice of cancellation under the statute. (Kotlar supra, 83 Cal.App.4th at p. 1121; see also Black's Law Dict. (11th ed. 2019), p. 962, col. 1 [defining "additional insured" as someone who "is covered by an insurance policy but who is not the primary insured"]; ibid. [defining "named additional insured" as an additional insured who is "specifically named in the policy" (italics omitted)].) The mere fact that 21st Century labeled Tania as a rated driver does not alter her status as an "insured" who was covered and specifically "named in the policy." (Kotlar, at p. 1121.)

The Court of Appeal also remanded the case back to the trial court for consideration of the plaintiffs’ bad faith cause of action.

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