Unpublished Disposition, 867 F.2d 612 (9th Cir. 1988)Annotate this Case
Paul CAMEN, Plaintiff-Appellant,v.SAFECO INSURANCE COMPANY OF AMERICA, Defendant-Appellee.
United States Court of Appeals, Ninth Circuit.
Submitted* Jan. 13, 1989.Decided Jan. 20, 1989.
Before ALARCON, BRUNETTI and DAVID R. THOMPSON, Circuit Judges.
FACTS AND PROCEEDINGS
Appellant was insured by Safeco, appellee here, under an automobile liability policy. The policy was labeled "Continuous Protection Plan" and contained the language, "This policy will be extended automatically each six months term on payment of the premium when due." The policy also stated:
(c) This agreement shall apply to each successive policy period for which the company consents to renew or continue this policy but nothing herein shall obligate the company to renew or continue this policy beyond the expiration of the policy period.
Appellee's Brief, Appendix A, p 15(c). On April 3, 1986, appellee refused to renew the policy upon tender of the premium. Appellant then brought this action on February 25, 1987, in the Superior Court of California. The defendant removed the action to the U.S. District Court under 28 U.S.C. § 1441 on diversity grounds. Appellant alleged in his complaint a violation of California Insurance code Sec. 790.03 and breach of the covenant of good faith and fair dealing for refusal to renew the policy and sought general and punitive damages. Appellee moved for summary judgment and although a hearing was scheduled for July 27, 1987, the court declined to hear oral argument. On September 4, 1987, the district court dismissed the complaint for failure to state a claim which effectively mooted appellant's summary judgment motion. Appellant appealed on September 28, 1987.
Appellant contends the district court erred when it dismissed the appellant's action sua sponte. We review this question of law de novo. Omar v. Sea-Land Service, Inc., 813 F.2d 986, 991 (9th Cir. 1987). California law applies to this diversity action. Erie v. Tompkins R.R., 304 U.S. 64, 78 (1936).
Appellant argues that appellee is liable for "bad faith non-renewal" of his automobile insurance policy under Cal.Ins.Code Sec. 790.03(h) and under the covenant of good faith and fair dealing. Both parties recognize that the California Supreme Court has not spoken specifically to the issue of non-renewal of insurance policies. Although it is unclear from the facts, appellant made some excessive claims on his policy. After appellee gave appellant the requisite notice (as required in the policy), it canceled the policy. Appellee had not told appellant that it had this discretion previous to appellant's purchase of the policy. The district court found no statutory duty of an insurer to inform insureds that the filing of excessive claims will result in non-renewal of the policy. And, the district court found that an insurance company has a right to terminate its policy when the time for renewal occurs. [CR 12]
The California Supreme Court has spoken on private rights of action under Cal.Ins.Code Sec. 790.03(h). Moradi-Shalal v. Fireman's Fund Insurance Companies, 46 Cal. 3d 287, 250 Cal. Rptr. 116 (1988). The court held that the insurance statute was meant to deal with administrative regulation of insurance practices by the Commissioner of Insurance. Id. at 126.
Neither section 790.03 nor section 790.09 was intended to create a private civil cause of action against an insurer that commits one of the various acts listed in section 790.03, subdivision (h).
Id. The court also made their decision prospective and the decision, which overruled Royal Globe Ins. Co. v. Superior Court, 23 Cal. 3d 880, 153 Cal. Rptr. 842 (1979), will not apply to those cases seeking relief under section 790.03 filed before the decision here (August 18, 1988). Appellant's complaint here is not barred by the case but is doubtful that this California Supreme Court would find any new private causes of action under 790.03--that is one for non-renewal of a policy.
Further, the California court would probably be inclined not to create a "bad faith" cause of action for non-renewal of insurance policies. The California appellate courts have spoken on the issue of whether an insurer has a legal duty to renew an automobile insurance policy once a term has expired. See Greene v. Safeco Ins. Co. of America, 140 Cal. App. 3d 535, 189 Cal. Rptr. 616, 618 (1983); Travelers Ins. Co. v. Lesher, 187 Cal. App. 3d 180, 231 Cal. Rptr. 791, 803 (1986) rev. denied (1987). In Greene the court analyzed a policy provision exactly like the one in the present case:
This agreement shall apply to each successive policy period which SAFECO consents to renew or continue this policy but nothing herein shall obligate SAFECO to renew or continue this policy beyond the expiration of any policy period.
Id., 189 Cal. Rptr. at 617. In that case, Safeco terminated the insured's coverage because they felt she had been uncooperative. Id. The insured argued there that Safeco's failure to renew her insurance policy was a breach of the implied covenant of good faith and fair dealing. Id. The insured argued that the reason for termination was arbitrary and in bad faith. However, Cal.Ins.Code Sec. 667 provides "there shall be no liability on the part of, and no cause of action of any nature shall arise against ... any insurer ... for any statement made ... in any written notice of cancellation or nonrenewal, or in any other communication, oral or written, specifying the reasons for cancellation or nonrenewal." Id., 189 Cal. Rptr. at 617-18. The court held that Safeco owed no duty to renew the policy and was not liable for damages for breach of the covenant of good faith and fair dealing. Id.
To require liability coverage against the judgment of the contracting parties would constitute an unprecedented judicial interference into private contractual and economic arrangements.
Id., 189 Cal. Rptr. at 619 (citing Farmers Ins. Exchange v. Cocking, 29 Cal. 3d 383, 390, 173 Cal. Rptr. 846, 850 (1981)). "Unless the policy provides otherwise, an insurer has no legal duty to renew an insurance policy when its term has expired." Travelers, 231 Cal. Rptr. at 803. This policy did not "provide otherwise."
Appellant has failed to state a cause of action under California "bad faith" law and under Cal.Ins.Code Sec. 790.03(h). Even if all allegations of material fact are taken as true and construed in the light most favorable to appellant, "it appears beyond doubt that [appellant] can prove no set of facts in support of his claim which would entitle him to relief." Gibson v. United States, 781 F.2d 1334, 1337 (9th Cir. 1986). A trial court may dismiss a claim sua sponte under Fed. R. Civ. P. 12(b) (6) where claimant could not possibly win relief. Omar at 991. Therefore the district court properly dismissed this action here. Id.
Appellant's appeal is frivolous, and accordingly appellee's motion for sanctions under Fed. R. App. P. 38 is granted. Appellee shall be granted on application its attorneys fees and double costs.