Harper v. Wausau Insurance (56 Cal. App. 4th 1079, 1997)

Opinion

TURNER, P. J.—

I. Introduction

Plaintiff, Geneva Harper, appeals from a summary judgment in favor of defendant, Wausau Insurance Company (Wausau). The present case involves a complaint for breach of contract and of the implied covenant of good faith and fair dealing on the theory plaintiff was a third party beneficiary of a medical payment provision in an insurance contract between Nationwide Insurance Company, a Wausau company, and L. A. Towers, Inc. In the published portion of this opinion, we discuss the existence of a triable issue as to whether plaintiff was an intended third party beneficiary of the medical payment insurance policy who may directly assert a cause of action for breach of contract against the insurer. For the reasons stated below, we conclude a triable issue existed as to whether she was an intended beneficiary of the medical payment provision of the policy who may seek contract damages. On that ground, we reverse the judgment.

II. Background

The complaint, which was filed on August 22, 1995, alleged causes of action for breach of contract and the implied covenant of good faith and fair dealing based upon defendant’s failure to pay plaintiff’s medical expenses after she was injured in a slip and fall outside of L.A. City Tower, Inc., on April 16, 1993. The complaint alleged Wausau, in a written contract of insurance with L. A. City Tower, Inc., agreed to pay up to $5,000 of medical bills of anybody who was injured on the property owned by the insured. Plaintiff alleged she was a third party beneficiary of the insurance contract. She further alleged she and L. A. City Tower had fully performed under the contract, including reporting the losses and claims and paying the premiums. Wausau failed and refused to respond to plaintiff’s demand for payment. Defendant answered the complaint and asserted a number of affirmative defenses including: (1) plaintiff was not an insured; (2) plaintiff lacked standing to bring the causes of action alleged in the complaint; and (3) plaintiff failed to perform all terms of the policy. Defendant subsequently moved for summary judgment or adjudication on the grounds plaintiff could not sue for breach of contract or the implied covenant of good faith and fair dealing because she was not a party to the insurance contract nor was she intended as a third party beneficiary. Further, a ground for the motion was that she failed to give proper notice pursuant to the terms of the policy.

In support of the motion, defendants presented and plaintiff did not dispute the following facts. She fell on April 16, 1993, at L. A. City Tower and 32d Street Market in Los Angeles. Plaintiff filed an action to recover damages from her fall entitled Harper v. L. A. City Tower, Inc. (Super. Ct. L.A. County, 1993, No. BC083543). Nationwide Insurance Company (Nationwide), a Wausau company, issued a commercial general liability policy No. 73-04-PR50722690001 to L. A. City Tower, Inc. Pursuant to the coverage in Nationwide’s policy, it defended L. A. City Tower, Inc., in the underlying action. A court trial of the underlying action resulted in judgment for the defense after the judge determined plaintiff failed to establish by a preponderance of the evidence that L. A. City Tower would have discovered the dangerous condition by the exercise of reasonable care.

L. A. City Tower, Inc., was insured by Nationwide for “bodily injury and property damage liability” under “Coverage A.” Plaintiff filed this action to recover benefits under the Nationwide policy under the “Coverage C” medical payment provision. The medical coverage 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; Fff] (2) On ways next to premises you own or rent; or [f] (3)--Because of your operations; [ payments will not exceed the applicable limit of insurance. We will páy reasonable expenses for: PH (1) First aid at the time of the accident;,PH (2) Necessary medical, surgical, x-ray and dental services, including prosthetic devices; and (3) Necessary ambulance, hospital, professional nursing and funeral services.”

Although there are no California cases which have addressed the specific issue raised in this appeal, a number of other authorities have concluded medical payment provisions of the type presently before us provide exceptions to the general rule barring actions against the insurer for liability. This is because the medical coverage provisions provide direct obligations on the part of the insurer to the intended beneficiaries. (See Donald v. Liberty Mut. Ins. Co. (7th Cir. 1994) 18 F.3d 474, 481 [employee injured on university property could maintain direct action against insurer for payment of medical benefits as third party beneficiary under provision]; Hunt v. First Ins. Co. of Hawaii Ltd. (1996) 82 Hawaii 363 [922 P.2d 976, 980-981] [slip-and-fall customer was intended beneficiary of medical payment provision and could bring direct action without violating general prohibition actions by third party against tortfeasor’s insured]; Desmond v. American Ins. Co. (Mo.App. 1989) 786 S.W.2d 144, 145-147 [slip-and-fall patron of theater could maintain direct action against insurance company as third party beneficiary of medical payment provision]; 8A, Appleman & Appleman, Insurance Law and Practice (1981) § 4902, pp. 228-229; contra Zegar v. Sears Roebuck and Co. (1991) 211 Ill.App.3d 1025 [156 Ill.Dec. 454, 570 N.E.2d 1176, 1179] [slip-and-fall plaintiff was incidental beneficiary of premises’ no-fault medical payment provision who had no direct cause of action against insurer].) Such provisions are not dependent upon the liability of the insured and are considered to be separate contractual obligations from the rest of the policy. (See Donald v. Liberty Mut. Ins. Co., supra, 18 F.3d at p. 481; Maxwell v. Southern American Fire Insurance Co. (Fla.Dist.Ct.App. 1970) 235 So.2d 768, 769-771; Hunt v. First Ins. Co. of Hawaii Ltd., supra, 922 P.2d at pp. 980-981; Garcia v. Lovellette (1994) 265 Ill.App.3d 724 [203 Ill.Dec. 376, 639 N.E.2d 935, 938-939]; Hein v. American Family Mutual Insurance Co. (Iowa 1969) 166 N.W.2d 363, 365; Lavin v. State Farm Mutual Automobile Insurance Co. (1964) 193 Kan. 22 [391 P.2d 992, 995-997]; Blocker v. Sterling (1968) 251 Md. 55 [246 A.2d 226, 230-231]; Desmond v. American Ins. Co., supra, 786 S.W.2d at pp. 145-147; Johnson v. New Jersey Mfrs. Indemnity Ins. Co. (1961) 69 N.J.Super. 184 [174 A.2d 4, 8]; Motto v. State Farm Mutual Automobile Insurance Co. (1969) 81 N.M. 35 [462 P.2d 620, 621-622]; Martinez v. Gulf Insurance Company (1961) 68 N.M. 90 [358 P.2d 1003, 1005-1007]; Nagy v. Lumbermens Mutual Casualty Company (1966) 100 R.I. 734 [219 A.2d 396, 398]; Moorman v. Nationwide Mutual Insurance Company (1966) 207 Va. 244 [148 S.E.2d 874, 876-878]; Maziarski v. Bair (1996) 83 Wn.App. 835 [924 P.2d 409, 413-414]; Carney v. Erie Ins. Co., Inc. (1993) 189 W.Va. 702 [434 S.E.2d 374, 377]; Severson v. Milwaukee Auto. Ins. Co. (1953) 265 Wis. 488 [61 N.W.2d 872, 875, 42 A.L.R.2d 976].) As one commentator has noted: “Medical provisions of liability, or homeowner’s, policies are a form of minimal group accident insurance provided at minimal cost with a named insured as the entity through whom the coverage is issued. ...['][] Generally, medical payment clauses are considered to constitute separate accident insurance coverage. Such coverage is divisible from the remainder of the policy, and creates a direct liability to the contemplated beneficiaries. 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 and liberal interpretation will be given. [