Unpublished Disposition, 872 F.2d 429 (9th Cir. 1986)

MEMORANDUM^* 

Nationwide Property and Casualty Insurance Company sought a declaratory judgment that its automobile liability policy did not cover an accident which occurred thirty-eight days after the policy lapsed. The district court held that by accepting a premium payment mailed three days after the accident, Nationwide had waived the policy's lapse. We agree and affirm the district court's summary judgment declaring that the Nationwide policy provides coverage for the accident.

FACTS

Maureen Reevis and her husband applied for and received an automobile insurance policy from Nationwide for the period from December 10, 1985 to June 10, 1986. Reevis tendered a quarterly premium payment by check in December 1985, which was returned for insufficient funds. Reevis then eliminated some of the coverage and Nationwide sent an adjusted bill dated February 19, 1986. Reevis returned the billing notice on which she wrote her credit card number and asked Nationwide to charge her account. Nationwide promptly advised Reevis that it would not accept this form of payment. On April 9, 1986, after appropriate payment still had not been received, Nationwide sent a written notice of cancellation advising Reevis that her policy would be cancelled as of April 25, 1986. Consistent with this notice, the policy was in fact cancelled April 25, 1986.

Reevis asserts there was a dispute during the period between February 19th (when Nationwide adjusted Reevis's premium) and April 25th (when Nationwide cancelled Reevis's policy for nonpayment), regarding the amount of the premium due. Although Nationwide denies there was a dispute, the record shows that Reevis was quoted three different amounts during this time period.¹ 

On June 2, 1986, Reevis was involved in an automobile accident in which she and co-appellee Hedges were injured. Reevis was hospitalized from June 2 to June 9, 1986. Sometime during that week, her husband notified Nationwide of the June 2nd accident. On June 5, 1986, Reevis's husband mailed Nationwide a premium payment of $449.50.²  On approximately June 9, 1986, when Reevis was released from the hospital, she telephoned Nationwide and related the circumstances of the accident.

Nationwide received the premium payment of $449.50 approximately June 10, 1986, although the exact date it was "accepted" by Nationwide is not established by the record. Nationwide applied $418.70 of this payment to the past due account, which paid for coverage from December 10, 1985 to the date of cancellation, April 25, 1986. The remaining $30.80 was applied to provide prospective coverage beginning June 10, 1986, the approximate date upon which the premium payment was received by Nationwide. Nationwide then issued a new policy, which Reevis received on June 18 or 19, 1986, to cover a period from June 10, 1986 to December 10, 1986. The declarations page of this new policy indicated that the prior policy had lapsed on April 25, 1986, that the $449.50 payment had cleared the amount due for the prior policy, and that an additional payment was due on the new policy. On June 24, 1986, Nationwide sent Reevis a letter in which it reiterated how the $449.50 payment had been applied, and advised Reevis that the new policy would be cancelled effective July 7, 1986, due to past payment problems and the fact that by then Reevis had been involved in the June 2nd accident.

ANALYSIS

The district court concluded that Nationwide's acceptance of the $449.50 payment revived the Reevis's already lapsed policy. Because Montana had not addressed this precise issue, the court based its decision on Van Hulle v. State Farm Mutual Ins. Co., 44 Ill. 2d 227, 254 N.E.2d 457 (1969).

In Van Hulle, the insured's policy had lapsed for nonpayment two months prior to a collision in which the insured's wife was killed. At the time of the collision, the wife was carrying a check for the overdue premium which was hand-delivered that day to the insurance agent. The insurance company was told of the accident, that the check was for retroactive coverage, and that if the check were not accepted for that purpose it should be returned. 254 N.E.2d at 459. The Illinois court held that the insurer waived the policy's earlier lapse by (1) accepting a payment expressly conditioned on obtaining retroactive coverage, and (2) accepting such a payment with full knowledge of the intervening loss. Id. at 460, 461.

In the instant case, the district court found that Nationwide waived lapse of the policy because, with full knowledge of the June 2nd accident, it accepted the Reevises' premium payment which was made after the date of the accident for the purpose of obtaining retroactive coverage for the period from December 10, 1985 to June 10, 1986. Nationwide argues that the payment was not a "payment of the premium charged" because Nationwide's invoice was for $461.90 and the payment was $449.50. Nationwide claims its acceptance of the payment should not be construed as a waiver since it was only a partial payment.³  See Panizzi v. State Farm Mutual Auto. Ins. Co., 386 F.2d 600 (3d Cir. 1967) (payment of only half of an overdue premium was insufficient to operate as a waiver of the insurer's lapse defense).

We do not agree that Reevis's payment is properly regarded as only a partial payment. The various Nationwide billings differed in amounts and created confusion as to the exact amount of the premium due. Reevis's husband paid the total of the itemized charges listed in the policy itself, which was $449.50. Under these circumstances, the payment is more aptly interpreted as a tender of "payment of the premium charged." This is what the evidence shows, and there is no evidence to the contrary.⁴ 

Nationwide contends there is a dispute as to whether it knew of the June 2nd accident when it accepted the late premium payment. The record does not establish the exact date the premium payment was accepted by Nationwide or the exact date Nationwide learned of the June 2nd accident. However, Reevis's husband reported the accident by telephone to the Nationwide office in Great Falls, Montana, on or prior to June 9, 1986. Nationwide received the premium payment of $449.50 approximately June 10, 1986. Therefore, Nationwide had notice of the June 2nd accident by the time the premium payment was received. Although it is not clear what date the payment was actually "accepted," this makes no difference because in any event it was eventually accepted, and acceptance had to occur after receipt. Moreover, in a letter to Reevis dated June 24, 1986, Nationwide acknowledged it knew of the accident, that it had accepted the $449.50 payment, and that it had applied the payment in a way that would straddle the date of the accident.

Nationwide argues there is no evidence in the record that Reevis tendered payment for the particular purpose of obtaining coverage to encompass the June 2nd accident. Nationwide points to Reevis's deposition testimony that her husband probably intended to pay for prospective coverage when he mailed Nationwide the $449.50 payment. Upon further questioning, however, Reevis testified she really did not know what her husband intended when he sent the payment. Reevis's statements are at best inconclusive as to what purpose her husband had in mind when he sent the $449.50 payment to Nationwide. As previously stated, however, the only evidence on this point is that the payment exactly matched the total of the itemized list of charges for insurance coverage under the policy for the period from December 10, 1985 to June 10, 1986.

Nationwide next points to the absence of an express request by Reevis to obtain retroactive coverage. It argues this is further evidence that the $449.50 payment was not tendered for any particular purpose. We note that a request to obtain retroactive coverage need not always be in the form of an express request. In Krumwiede v. Bankers Life & Cas. Co., 95 Ill.App.3d 861, 420 N.E.2d 745 (1981), plaintiff sued to recover under two policies of health insurance. The insurer argued inter alia, that it had not waived its lapse defense because plaintiff had not communicated an intent to obtain retroactive coverage. The court disagreed, stating that plaintiff's oral notification of his illness coupled with his subsequent filing of a claim form constituted communication of his intent to obtain retroactive coverage. 420 N.E.2d at 747.

The uncontroverted facts of the present case show that the Reevises communicated their intent to obtain coverage for the period encompassing the June 2nd accident. Nationwide knew of the accident from Reevis's husband's initial telephone report while Reevis was in the hospital. This was followed by a report from Reevis herself when she got out of the hospital and called Nationwide on or about June 9th. The premium payment was received and accepted by Nationwide thereafter. The payment was in the amount of the itemized charges on the declarations page of the policy for the period from December 10, 1985 to June 10, 1986. In its June 24, 1986 letter, Nationwide acknowledged it had accepted the premium in its entirety, with knowledge of the accident, but that it unilaterally had applied the premium in a manner which would deny coverage for a discrete window of time during which the accident occurred. Given these facts, about which there is no dispute, the district court did not err in concluding that Nationwide waived the lapse of the policy.

AFFIRMED.