Silberg v. California Life Insurance Company

Enrique Silberg (plaintiff) owned and operated a dry-cleaning business. His landlord owned a laundromat that Silberg sporadically worked at in exchange for reduced rent. On July 17, 1966, Silberg was injured in an accident at the laundromat and admitted to a hospital. Silberg told the hospital that he was insured by California Life Insurance Company (CLIC) (defendant). Silberg’s policy with CLIC contained an exclusion for losses that would be payable under workmen’s compensation. Silberg later notified and filed claims with CLIC for his injury. In his claim forms, Silberg declared that he was self-employed and would be seeking workmen’s compensation. Silberg was hospitalized two more times for injuries stemming from the same accident. Because CLIC failed to pay any of Silberg’s medical bills, he had to go to different hospitals each time. Silberg notified each hospital that he was insured by CLIC. However, when Silberg sought to collect workmen’s compensation, his claim was denied. According to the Workmen’s Compensation Appeals Board (Board), Silberg was not an employee. Silberg’s workmen’s-compensation claim was later settled without a determination as to Silberg’s employment status. Silberg filed suit against CLIC, seeking a declaration that CLIC was liable under the policy because the Board had not formally found that Silberg’s injury was covered by workmen’s compensation. At trial, the manager of CLIC’s claims department testified that CLIC had failed to pay Silberg’s claims because CLIC was awaiting the findings of the Board before determining whether the exclusion applied. The trial court found that Silberg’s policy with CLIC was ambiguous, and issued an order requiring CLIC to pay Silberg’s medical costs. CLIC appealed.