In this class action, the representative plaintiffs
After a careful review of the allegation of plaintiffs' complaint and the applicable law, we are persuaded that the trial court correctly sustained the demurrer without leave to amend as to certain of the insurer defendants, but as to others it should have been sustained with leave to amend. The defendant insurers are correct in their contentions with respect to those insurers marketing a single liability policy covering two or more vehicles. The relevant statute requires the very action about which the plaintiffs complain. Thus, they can be liable under neither the unfair competition law (UCL) (Bus. & Prof.Code, § 17200 et seq.)
FACTUAL AND PROCEDURAL BACKGROUND
In their complaint, plaintiffs allege that, during the four years immediately preceding February 19, 1998 (the date the plaintiffs filed their original complaint), the defendant insurers were responsible for providing approximately 80 percent of the automobile liability insurance sold in California. During that period, there were approximately 4,700,000 insured automobile owners who owned and operated two or more vehicles in the same household. Included in this group were the plaintiffs, and others, who desired to purchase uninsured motorist coverage for only one, or at least less than all, of their multiple vehicles. The defendant insurers, however, required that the plaintiffs and other insureds either purchase uninsured motorist coverage for all of their vehicles or have no uninsured motorist coverage on any vehicle.
Insurance Code, section 11580.2,
The next sentence of section 11580.2, subdivision (a)(1), identifies the three circumstances by which the coverage can be waived or modified through the agreement of the insurer and policyholder. It provides: "The insurer and any named insured, prior to or subsequent to the issuance or renewal of a policy, may, by agreement in writing, in the form specified in paragraph (2) or paragraph (3), (1) delete the provision covering damage caused by an uninsured motor vehicle completely, or (2) delete the coverage when a motor vehicle is operated by a natural person or persons designated by name, or (3) agree to provide the coverage in an amount less than that required by subdivision (m) but not less than the financial responsibility requirements specified in Section 16056 of the Vehicle Code."
Section 11580.2, subdivision (a), thus authorizes three-and only three-means by which uninsured motorist coverage can be entirely waived, deleted, or modified and mandates the specific language that is to be used in any written agreement providing for such waiver or modification. (§ 11580.2, subd. (a)(2), (a)(3).)
According to plaintiffs, since at least February 1994, the defendant insurers have participated in a civil conspiracy or combination to sell uninsured motorist insurance pursuant to an alleged "business policy" that decrees that any particular automobile owner seeking such insurance must purchase additional coverage at an additional price. Plaintiffs further allege that in some cases, this additional price is equal to approximately 80 percent of the initial policy price applied to each vehicle that the owner seeks to insure for liability coverage under the financial responsibility requirements of Vehicle Code section 16056.
Plaintiffs allege that additional uninsured motorist insurance covering more than one vehicle is both unnecessary and wasteful. Because of that, and because there can be no stacking of the insurance limits of multiple policies (see § 11580.2, subd. (d)), plaintiffs claim that they should have the right to purchase coverage on less than all of their vehicles. But, due to the aforesaid "business practice" of the defendant insurers, plaintiffs were coerced into purchasing coverage on all owned vehicles, under threat of otherwise having no uninsured motorist coverage at all.
Plaintiffs alleged that this "business practice" was an unfair business practice under the UCA (Bus. & Prof.Code, § 17200 et seq.), and resulted in class members being charged "coerced rates" for unwanted coverage. They also alleged that this "business practice" resulted in restraint of trade, price fixing, tying agreements and other illegal trade practices, all in violation of the Cartwright Act (Bus. & Prof.Code, § 16700, et seq.), as well as provisions of the federal Clayton Act, all to the class's damage. The defendant insurers demurred to the complaint. Despite multiple opportunities to amend, plaintiffs were unable to allege facts sufficient to satisfy the trial court. It held that section 11580.2 required defendants to offer uninsured motorist coverage on an "all or nothing" basis to persons who owned multiple vehicles. Accordingly, the trial court concluded that the defendant insurers could not be liable for agreeing to do what the law required them to do in the first place. Their demurrer was sustained without leave to amend and a judgment of dismissal was entered.
Plaintiffs argue that the trial court's conclusion that the Insurance Code required
The defendant insurers advance several arguments in support of the trial court's order of dismissal. First, and primarily, they contend that section 11580.2 mandates that uninsured motorist coverage be provided (in specified minimum amounts) in every "policy of bodily injury liability insurance" issued or delivered in California. There are three, and only three, circumstances in which such requirement may be waived or modified (one of which is a written agreement to waive all uninsured motorist coverage under the policy); the statute makes no provision for a right to waive such coverage on a "per vehicle" basis. Thus, in the case of a single policy covering multiple vehicles, uninsured motorist coverage must be purchased for all vehicles or waived as to all. With respect to those defendant insurers that issue separate policies for each vehicle owned by an insured (State Farm, Farmers and Allstate), they argue that they permit their insureds to waive uninsured motorist coverage for any of those policies. This contention, however, is contrary to the allegations of the complaint.
1. Standard of Review
We review here an order of the trial court sustaining a demurrer without leave to amend. A demurrer tests the sufficiency of the allegations in a complaint as a matter of law. (Pacifica Homeowners' Assn. v. Wesley Palms Retirement Community (1986) 178 Cal.App.3d 1147, 1151, 224 Cal.Rptr. 380.) We review the sufficiency of the challenged complaint de novo. (Coopers & Lybrand v. Superior Court (1989) 212 Cal.App.3d 524, 529, 260 Cal.Rptr. 713.) We accept as true the properly pleaded allegations of fact in the complaint, but not the contentions, deductions or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) We also accept as true facts which may be inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403, 44 Cal.Rptr.2d 339.) We consider matters which may be judicially noticed, and we "give the complaint a reasonable interpretation, reading it as a whole and its parts in their context." (Blank v. Kirwan, supra, 39 Cal.3d at p. 318, 216 Cal.Rptr. 718, 703 P.2d 58.) We do not concern ourselves with whether the plaintiff will be able to prove the facts that he or she may allege in the complaint. (Parsons v. Tickner (1995) 31 Cal.App.4th 1513,1521, 37 Cal.Rptr.2d 810.)
The judgment or order of dismissal must be affirmed if any one of the grounds for demurrer raised by the defendant is well taken and disposes of the complaint. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal.Rptr.2d 92, 831 P.2d 317.) It is error, however, to sustain a general demurrer if the complaint states a cause of action under any possible legal theory. (Ibid.) Further, it is an abuse of the trial court's discretion to sustain a demurrer without leave to amend if there is a reasonable possibility the plaintiff can amend the complaint to allege any cause of action. (Ibid.) To prove such abuse of discretion, however, the plaintiff must demonstrate how the complaint can be amended. (Ibid.) While such a showing can be made for the first time to the reviewing court (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1386, 272 Cal.Rptr. 387), it must be made. As the trial court noted, the plaintiffs have had four opportunities to allege viable causes of action against the insurer defendants.
2. The Relevant Law Applicable to the Purchase and Waiver of Uninsured Motorist Coverage
a. Uninsured Motorist Coverage Provided in a Single Policy Covering Multiple Vehicles May Not Be Waived on a "Per Vehicle" Basis
Section 11580.2, subdivision (a) is very clear and unambiguous: "No policy of bodily injury liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle, ... shall be issued or delivered in this state, ... unless the policy contains, ... a provision [for specified limits of uninsured motorist coverage]...." (Italics added.)
The Legislature enacted section 11580.2 in 1959
From the outset, it was clear that this coverage was required for every policy. However, it was not deemed to be compulsory; the insurer and insured were permitted to delete the provision entirely. The original legislation provided that "the insurer and the insured may by supplemental agreement waive application of the provision covering damage caused by an uninsured motor vehicle." (§ 11580.2, as originally enacted by Stats.1961, ch. 1189, § 2, p. 2921.) This was the only way that the coverage could be deleted. By subsequent enactments, the Legislature ultimately added two new subparagraphs to subdivision (a) of section 11580.2, which provided that not only did such supplemental agreement have to be in writing, but it had to be in a particular form (§ 11580.2, subd. (a)(1), (a)(2) and (a)(3).) In addition, in 1971 and 1972, the Legislature added provisions that permitted (1) the deletion of coverage when the vehicle was being operated by a named natural person, and (2) the reduction in the amount of coverage (but not to an amount less than the financial responsibility minimum specified in Vehicle Code section 16056). (Stats.1971, ch. 1564, § 4, eff. Nov. 17, 1971; Stats.1972, ch. 952, § 1, p. 1722.)
The basic and first rule that guides our interpretation and construction of a statute is well established. "The fundamental task of statutory construction is to `ascertain the intent of the lawmakers so as to effectuate the purpose of the law. [Citations.] In order to determine this intent, we begin by examining the language of the statute.' [Citation.]" (People v. Cruz (1996) 13 Cal.4th 764, 774-775, 55 Cal.Rptr.2d 117, 919 P.2d 731; italics added.) When the statutory language is plain and clear and unambiguously expresses the Legislative intent and the single meaning of the language is apparent on its face, we must give it effect. (Kimmel v. Goland (1990) 51 Cal.3d 202, 208, 271 Cal.Rptr. 191, 793 P.2d 524; People v. Hinks (1997) 58 Cal.App.4th 1157, 1162, 68 Cal.Rptr.2d 440.) The plaintiffs, in asking us to judicially recognize an insured's right to delete one or more (but less than all) vehicles from a policy's uninsured motorist coverage, seek to have us read into this statute something that simply is not there. This we cannot do. "In the construction of a statute or instrument, the office of the Judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all." (Code Civ. Proc., § 1858.)
Plaintiffs argue, however, that such a legislative analysis and conclusion ignores the language of another part of section 11580.2. They rely on subdivision (c)(6), which provides that uninsured motorist coverage (otherwise available under the insured's liability policy) "does not apply" to "bodily injury of the insured while occupying a motor vehicle owned by an insured or leased to an insured ... unless the occupied vehicle is an insured motor vehicle...." (Italics added.) Plaintiffs seem to be arguing that by its enactment of subdivision (c)(6) in 1968, the Legislature effectively recognized a "per vehicle" deletion of uninsured motorist coverage. Otherwise, they argue, the statutory language would make no sense. We disagree.
Subdivision (c)(6) also appears to be clear and straightforward. It precludes the insured from claiming the benefits of uninsured motorist coverage if he or she suffers a bodily injury arising from the negligence of an uninsured motorist while the insured is occupying an uninsured motor vehicle owned by a person who is an insured under the insured's liability policy. For example, the insured's son is a resident in the insured's household and is therefore an insured under the insured's policy; but if he happens to own his own motor vehicle, which is not covered by a policy of liability insurance, then the insured's own uninsured motorist coverage will not apply if the insured is injured while riding with his son and there is an accident resulting from the negligence of some uninsured motorist.
In Hartford Casualty Ins. Co. v. Camilla (1994) 28 Cal.App.4th 1305, 34 Cal.Rptr.2d 302, the insured was riding his motorcycle when he was struck and killed by an uninsured motorist. The insurance policy for his motorcycle included uninsured motorist coverage for only $15,000 per insured, but he also had a policy covering a van which provided such coverage in the amount of $1 million. When the insurer refused to tender $1 million to the policyholder's surviving spouse, she brought suit. The court held that the wife was limited to receiving the limits for the uninsured motorist coverage on the motorcycle. As the court put it, the wife's argument "strains credulity when one considers the specific problem ... subdivision (c)(6) was meant to resolve, the purpose of the statute and the language of the statute read as a whole. [The wife] argues that section 11580.2 simply insures people, not vehicles. She is only half right. The section allows only certain people to claim uninsured motorist coverage—those whose uninsured motorist insurance covers the vehicle they are driving at the time of an accident with an uninsured motorist." (Id., at pp. 1311-1312, 34 Cal.Rptr.2d 302; italics added; see also Harrison v. California State Auto. Assn. Inter-Ins. Bureau (1976) 56 Cal.App.3d 657, 662-663, 128 Cal.Rptr. 514.)
We find no support whatever in the language of section 11580.2, subdivision (c)(6) for plaintiffs' argument. It reflects, in our view, no intent or purpose of the Legislature to recognize a new or an additional means or manner of waiving uninsured motorist coverage. It was enacted for an entirely different purpose. As one court put it, the subdivision "was added to rectify a specific problem-attempts by those who do not maintain insurance to use another's coverage to make a claim. It was intended to make sure people carry their own insurance for their own claims." (Hartford Casualty Ins. Co. v. Cancilla, supra, 28 Cal.App.4th at p. 1313, 34 Cal.Rptr.2d 302.) The language of subdivision (c)(6) adds nothing to the argument before us; it has nothing to do with a legislative attempt to amend the waivers provision of subdivision (a)(1) of section 11580.2. As our previous discussion demonstrates, when the Legislature wanted to amend those provisions so as to prescribe the limited bases for the waiver of uninsured motorist coverage, it knew precisely how to do it and did so explicitly.
While it is true that we should construe liberally the uninsured motorist statutory provisions, a liberal interpretation does not mean enlarging the plain provisions of law. As we have already emphasized, the function of judicial interpretation is to declare what is contained in a statute, not to insert what has been omitted. (Code Civ. Proc., § 1858; California Fed. Savings & Loan Assn. v. City
b. Insureds Purchasing Separate Policies for Each of Multiple Vehicles May Waive Uninsured Motorist Coverage for Any or All Of Said Vehicles By Waiving Such Coverage as to One or More of Said Policies
From the above discussion, it is clear that a waiver of uninsured motorist coverage must be as to all vehicles covered under a single policy. In other words, the waiver is as to the coverage provided by the policy; it may not be accomplished as to some but less than all of the covered vehicles. Where, however, an insured purchases a separate policy for each of several vehicles, that same principle would obviously permit the insured to waive uninsured motorist coverage as to one, all or less than all of those vehicles. The defendant insurers do not quarrel with this. As we have pointed out, three of the defendant insurers (State Farm, Farmers and Allstate), in fact, sell separate individual policies for each vehicle owned by an insured.
As to such separate policies, the Insurance Code not only does not preclude waiver on a "per car" basis but it necessarily authorizes it. To the extent that any of the defendant insurers have wrongfully refused to permit their insureds whose multiple vehicles are covered by separate policies to waive uninsured motorist coverage except upon an "all or none" basis, as is alleged in plaintiffs' complaint, they cannot justify their action by reliance on the Insurance Code.
c. An Insurer May Not Be Required to Issue Separate Policies to an Insured Seeking Coverage for Multiple Vehicles
As this record reflects, some of the defendant insurers follow the practice of issuing a single policy that covers all of the vehicles an insured desires to insure. Others are willing to sell separate policies covering each vehicle owned by an insured. In our view, this is simply a business or marketing decision best left to the judgment of each insurer. (See, e.g., Barnes v. State Farm Mut. Auto. Ins. Co. (1993) 16 Cal.App.4th 365, 378, 20 Cal.Rptr.2d 87.) Similarly, an insured desiring to have a separate policy for each one of his or her multiple vehicles (and thus the ability to waive uninsured motorist coverage on some, but less than all of said multiple vehicles) can chose to do business with an insurer which follows such practice.
There is nothing in the Insurance Code which specifies or requires an insurer to adopt either marketing policy. It is simply silent on the issue. In addition, it is clear that the Legislature has been long
3. Insurer Is Not Liable Under UCA For Engaging In Conduct Mandated or Authorized by Insurance Code.
The UCL (Bus. & Prof.Code, § 17200) provides that any "unlawful," "unfair" or "fraudulent" business act or practice is deemed to be unfair competition. (State Farm Fire & Casualty Co. v. Superior Court (Allegro) (1996) 45 Cal.App.4th 1093, 1102, 53 Cal.Rptr.2d 229 [State Farm].) Injunctive relief and/or restitution are the remedies authorized. (Bus. & Prof.Code, § 17203.)
It is not necessary for a business practice to be "unlawful" in order to be subject to an action under the unfair competition law. "The `unfair' standard, the second prong of [Business and Professions Code] section 17200, also provides an independent basis for relief. This standard is intentionally broad, thus allowing courts maximum discretion to prohibit new schemes to defraud. [Citation.] The test of whether a business practice is unfair 'involves an examination of [that practice's] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim.... [Citations.]' [Citation.] In People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 206 Cal.Rptr. 164, the court, acknowledging that the parameters of the term `unfair business practice' had not been defined in a California case, applied guidelines adopted by the Federal Trade Commission and sanctioned by the United States Supreme Court in FTC v. Sperry & Hutchinson Co. (1972) 405 U.S. 233, 244 [92 S.Ct. 898, 905, 31 L.Ed.2d 170, 179].
"Examples of unfair business practices include: charging a higher than normal rate for copies of deposition transcripts (by a group of certified shorthand reporters), where the party receiving the original is being given an undisclosed discount as the result of an exclusive volume-discount contract with two insurance companies [citation]; placing unlawful or unenforceable terms in form contracts [citation]; asserting a contractual right one does not have [citations]; systematically breaching a form contract affecting many consumers
Without a doubt the concept of proscribing such a range of conduct by the term "unfair" business activity is very broad in its scope;
The same conclusion does not apply, however, to those insurers that issued separate policies for each of an insured's multiple vehicles, but nonetheless refused to permit any waiver that did not include all of the insured's vehicles. Such conduct is at least generally alleged by plaintiffs and, it is also alleged, was done for the purpose of requiring insureds to purchase more uninsured motorist coverage than was needed, all to the alleged increased premium benefit of the defendant insurers and to the injury and damage of insureds who were faced with the choice of paying wasteful increased premiums or going without any uninsured motorist coverage.
4. Plaintiffs Have Failed to Allege Adequately a Conspiracy to Violate the Cartwright Act
Business and Professions Code, section 16720, a part of the Cartwright Act, includes the following among the acts it defines as a prohibited "trust": "`[A]cts by two or more persons ...: [¶] (a) To create or carry out restrictions in trade or commerce.' Insurance is `commerce' within the meaning of this section. [Citation.] While refusing to sell a product to a consumer
An agreement among merchants is prohibited by Business and Professions Code section 16720 only if restraint of trade in the commodity is the purpose of the agreement. (Quelimane Co., supra, 19 Cal.4th at p. 49, 77 Cal.Rptr.2d 709, 960 P.2d 513.) "A cause of action for restraint of trade under the Cartwright Act or common law principles must allege both a purpose to restrain trade and injury to the business of the plaintiff traceable to actions in furtherance of that purpose. [Citations.]" (Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 119, 81 Cal.Rptr. 592, 460 P.2d 464.)
"A cause of action for a conspiracy in restraint of trade `"must allege (1) the formation and operation of the conspiracy, (2) the wrongful act or acts done pursuant thereto, and (3) the damage resulting from such act or acts. [Citations.]" [Citation.] General allegations of agreement have been held sufficient [citation], and the conspiracy averment has even been held unnecessary, providing the unlawful acts or civil wrongs are otherwise sufficiently alleged.' [Citations.]" (Quelimane Co., supra, 19 Cal.4th at pp. 47-48, 77 Cal.Rptr.2d 709, 960 P.2d 513.) General allegations of agreement have been upheld, and allegations of conspiracy have been held to be unnecessary, "providing the unlawful acts or civil wrongs are otherwise sufficiently alleged." (Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 316, 70 Cal.Rptr. 849, 444 P.2d 481.) It appears settled, however, that "`a plaintiff cannot merely restate the elements of a Cartwright Act violation. Rather, in order to sufficiently state a cause of action, the plaintiff must allege in its complaint certain facts in addition to the elements of the alleged unlawful act so that the defendant can understand the nature of the alleged wrong and discovery is not merely a blind `fishing expedition' for some unknown wrongful acts. [Citation.]" (Cellular Plus, Inc. v. Superior Court (1993) 14 Cal.App.4th 1224, 1236, 18 Cal.Rptr.2d 308; italics added.)
While the unilateral action of one or more insurers with respect to the terms upon which they will sell automobile policies would not offend the antitrust laws (although it might still be actionable as a violation of the UCA), when it is alleged that two or more insurers have entered into an agreement to act in concert to impose a business policy that is not man dated by the Insurance Code and has the purpose and effect of depriving insureds of the ability to purchase individual policies for each one of multiple vehicles owned (i.e., the ability to waive-and thus avoid premiums for unwanted uninsured motorist coverage for some but less than all of their vehicles), then a violation of the Cartwright Act would have been alleged. Such alleged concerted action, which has the effect of limiting the market place options of insureds, increasing their premium costs or, alternatively, forcing them to forgo all uninsured motorist coverage (a result which is itself contrary to California public policy), would sufficiently allege an
The only allegation that we can find in plaintiffs' complaint that even purports to provide the required "certain facts" needed to enable the defendant insurers to understand the nature of their alleged wrongful act is found in paragraph 23: "the insurer defendants, and each of them, engaged together in a common scheme and civil conspiracy to unlawfully coerce certain consumers of automobile liability insurance, who owned more than one vehicle to be so insured to purchase more [uninsured motorist] coverage than what the purchaser desired, by refusing to sell said purchaser any [uninsured motorist] coverage at all unless said coverage applied to all of said purchaser's insured vehicles."
This is a very conclusionary allegation and provides no factual information to the defendant insurers. As we have pointed out, most of the defendant insurers were compelled by law (i.e., section 11580.2, subd. (a)) to do the very act about which plaintiffs complain. Thus, their conduct could not be described as unlawful. Whether or not they acted in concert with other insurers, they could not lawfully do otherwise. As to these insurers, the most plaintiffs have alleged is parallel action in accordance with a clear statutory mandate. Therefore, their conduct could not, as a matter of law, constitute a violation of the Cartwright Act. Given the conclusions we have reached as to the lawfulness of their actions, the general allegations of the complaint simply state no claim against these insurers. (See generally, Cellular Plus, Inc. v. Superior Court, supra, 14 Cal. App.4th at p. 1236, 18 Cal.Rptr.2d 308.) In the absence of more particular allegations, we decline to engage in any speculation as to just what wrongful acts or unlawful purposes may have occurred or been present so as to justify the conclusion that a Cartwright Act violation was committed. As plaintiffs have not been able to state a viable claim for violation of the Cartwright Act as to all but three of the defendant insurers, the trial court properly sustained their demurrer without leave to amend.
As to those defendant insurers that issued separate policies covering each one of an insured's multiple vehicles, they stand in a different position as they cannot rely on the same statutory mandate. Nonetheless, we are similarly concerned with the generality of plaintiffs' allegations. We have a concern that plaintiffs cannot truthfully allege that these insurers ever refused a separate request or demand to waive uninsured motorist coverage as to a particular policy. For example, there are no allegations that any of the plaintiffs ever demanded that a particular insurer do so. All we have are allegations of what amounts to parallel conduct accompanied by the general and conclusionary allegation that it was done pursuant to a "common scheme and civil conspiracy." But there are no allegations that plaintiffs requested that their policies be modified as permitted by the statute or that the insurers in spite of such requests refused to allow the plaintiffs to effect a waiver as to some, but less than all, of their separate vehicle policies. In addition, the insurers' "unlawful" economic motive or purpose is not apparent from the plaintiffs' general allegations. The insurer is obviously exposed to greater risk as to each vehicle insured. Thus, a premium charged for uninsured motorist coverage for a particular vehicle provides a separate additional benefit to the insured and a separate additional risk for the insurer. Coverage for
These are all matters that need to be clearly alleged so that those defendant insurers selling individual policies will know precisely what unlawful acts they are charged with having committed and just what facts and circumstances exist that justify application of the Cartwright Act. As to those defendant insurers selling separate policies, the demurrer may have been properly sustained, but it should have been sustained with leave to amend. We acknowledge that plaintiffs already have had four opportunities to plead their claim, but the trial court sustained the demurrer of the insurer defendants on a basis that actually applies only to some of them; it apparently did not consider the different legal position of those insurer defendants issuing separate policies. Now that we have clarified and isolated this issue, we believe it is appropriate that plaintiffs be given one more opportunity to see if they can plead a Cartwright that violation as to those particular insurer defendants whose specific business practice of issuing separate policies for each of an insured's multiple vehicles was not reflected in the trial court's order.
5. The Need to Exhaust Administrative Remedies Before the Insurance Commissioner
The final argument asserted by some of the defendant insurers (see fn. 12, ante) is that the alleged "business practice" of the defendant insurers with respect to the "all or nothing" waiver of uninsured motorist coverage constituted an "underwriting rule" and thus came within the exclusive jurisdiction of the Insurance Commissioner. (See § 1858.)
Critical to the argument of the defendant insurers is the proposition that the refusal to provide insurance except on an all or nothing at all basis is an underwriting rule. "Underwriting" is a label commonly applied to the process, fundamental to the concept of insurance, of deciding which risks to insure and which to reject in order to spread losses over risks in an economically feasible way. (Group Life & Health Ins. Co. v. Royal Drug Co. (1979) 440 U.S. 205, 211-213, 99 S.Ct. 1067, 1073-1074, 59 L.Ed.2d 261; Wilson v. Fair Employment & Housing Com. (1996) 46 Cal.App.4th 1213, 1226, 54 Cal.Rptr.2d 419 (Bamattre Manoukian, J., dissenting); cf. also 1 Couch, Insurance (3d ed.1995) § 1.9, p. 116.) Given such understanding and the provisions of section 1858, subdivision (a) (see fn. 27, ante), it seems to us that an underwriting rule is properly characterized as a rule followed or adopted by an insurer or a rating organization which either (1) limits the conditions under which a policy will be issued or (2) impacts the rates that will be charged for that policy.
The defendant insurers cite us to three cases that seem to demonstrate the accuracy of that definition. The three cases cited all involved circumstances in which the rule either entirely excluded coverage for a particular category of risk (Wilkinson v. Norcal Mutual Ins. Co. (1979) 98 Cal.App.3d 307, 311-312, 159 Cal.Rptr. 416 [neurosurgery and orthopedic surgery excluded from coverage]; Wilson v. Fair Employment & Housing Comm. (1996) 46 Cal.App.4th 1213, 1221, 54 Cal.Rptr.2d 419) [flights piloted by pilots over the age of 60 excluded from coverage]), or treated all automobile losses as chargeable to the principal place of garaging the insured vehicle, rather than the location of the accident, thus impacting the rates to be charged. County of Los Angeles v. Farmers Ins. Exchange (1982) 132 Cal.App.3d 77, 81-84, 182 Cal.Rptr. 879. Such actions clearly impacted rates or conditioned coverage. In each case, the insurer had decided that either excluding categories of risks, or applying rules as to the location of charge-offs, was the method best suited to spreading its risks.
Given the relief sought by the plaintiffs, the trial court should also consider the possible application of the primary jurisdiction doctrine. (See Farmers Insurance Exchange v. Superior Court (1992) 2 Cal.4th 377, 391-401, 6 Cal.Rptr.2d 487,
The trial court correctly sustained without leave to amend the demurrer of the defendant insurers selling policies covering multiple vehicles. No cause of action was or can be stated against them by the plaintiffs and a judgment of dismissal was properly entered. However, as to the defendant insurers selling separate policies covering each of multiple vehicles, the demurrer should have been sustained with leave to amend. But, before permitting such amendment or conducting any further proceedings in this matter, the trial court should consider and decide the issue of exhaustion of administrative remedies raised by the defendant insurers, as well as the possible application of the primary jurisdiction doctrine, giving all parties a full opportunity to brief and argue those issues.
The judgment of dismissal is affirmed in part and reversed in part. As to the several insurer defendants that issue single policies covering multiple vehicles, (i.e., other than State Farm, Farmers and Allstate), the judgment of dismissal is affirmed. As to the insurer defendants State Farm, Farmers and Allstate, the judgment of dismissal is reversed and the matter is remanded for further proceedings consistent with the views expressed herein. Each party shall bear his, her or its own costs on appeal.
We concur: KLEIN, P.J. and KITCHING, J.
"The California Insurance Code requires an insurer to provide uninsured motorists coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle. Those provisions also permit the insurer and the applicant to delete the coverage completely or to delete the coverage when a motor vehicle is operated by a natural person or persons designated by name. Uninsured motorists coverage insures the insured, his or her heirs, or legal representatives for all sums within the limits established by law, which the person or persons are legally entitled to recover as damages for bodily injury, including any resulting sickness, disease, or death, to the insured from the owner or operator of an uninsured motor vehicle not owned or operated by the insured or a resident of the same household. An uninsured motor vehicle includes an underinsured motor vehicle as defined in subdivision (p) of Section 11580.2 of the Insurance Code." (§ 11580.2, subd. (a)(2), italics added.)
The agreement to provide uninsured motorist coverage in an amount less than that required by subdivision (m) of section 11580.2 must be in the following form:
"The California Insurance Code requires an insurer to provide uninsured motorists coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle. Those provisions also permit the insurer and the applicant to agree to provide the coverage in an amount less than that required by subdivision (m) of Section 11580.2 of the Insurance Code but not less than the financial responsibility requirements. Uninsured motorists coverage insures the insured, his or her heirs, or legal representatives for all sums within the limits established by law, which the person or persons are legally entitled to recover as damages for bodily injury, including any resulting sickness, disease, or death, to the insured from the owner or operator of an uninsured motor vehicle not owned or operated by the insured or a resident of the same household. An uninsured motor vehicle includes an underinsured motor vehicle as defined in subdivision (p) of Section 11580.2 of the Insurance Code." (§ 11580.2, subd. (a)(3), italics added.)
As the court itself acknowledged, we are not to read Cel-Tech as suggesting that such a restrictive definition of "unfair" should be applied in the case of an alleged consumer injury. The court stated, "[t]his case involves an action by a competitor alleging anticompetitive practices. Our discussion and this test are limited to that context. Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law such as `fraudulent' or `unlawful' business practices or `unfair, deceptive, untrue or misleading advertising.' We also express no view on the application of federal cases such as FTC v. Sperry & Hutchinson Co. (1972) 405 U.S. 233 [92 S.Ct. 898, 31 L.Ed.2d 170] that involve injury to consumers and therefore do not relate to actions like this one." (Cel-Tech, supra, 20 Cal.4th p. 187, fn. 12, 83 Cal.Rptr.2d 548, 973 P.2d 527.) It would thus appear that the Cel-Tech court's comments did not signal a retreat (at least in non-competitor cases), from its earlier statements in Barquis v. Merchants Collection Assn., supra, 7 Cal.3d at pp. 111-112, 101 Cal.Rptr. 745, 496 P.2d 817. (See fn. 22, ante.)
"(a) Any person aggrieved by any rate charged, rating plan, rating system, or underwriting rule followed or adopted by an insurer or rating organization, may file a written complaint with the commissioner requesting that the commissioner review the manner in which the rate, plan, system, or rule has been applied with respect to the insurance afforded to that person. In addition, the aggrieved person may file a written request for a public hearing before the commissioner, specifying the grounds relied upon.
"(b) The commissioner shall advise the insurer or rating organization that a complaint has been filed against it and the nature of the complaint and provide the insurer or rating organization with an opportunity to respond to the complaint.
"(c) If the commissioner has information concerning a similar complaint, he or she may deny the request for a public hearing until a determination is made or a public hearing is held on the similar complaint or may consolidate similar complaints for determination or public hearing. If he or she believes, after review and investigation of the facts alleged in the complaint and the facts alleged in any response to the complaint, that probable cause for the complaint does not exist or that the complaint is not made in good faith, he or she shall so advise the complainant and shall deny any request made for a public hearing. If he or she believes, after review and investigation of the facts alleged in the complaint and the facts alleged in any response to the complaint, that probable cause for the complaint does exist, that the complaint charges a violation of this chapter, and that the complainant would be aggrieved if the violation is proven, he or she shall proceed as provided in Section 1858.1 unless the complaint was accompanied by a request for public hearing, in which case he or she shall proceed as provided in Section 1858.2.
"(d) Nothing in this section prohibits or limits the right of any aggrieved person, either prior to or in conjunction with the filing of a written complaint with the commissioner under this section, from requesting an insurer or rating organization to review the manner in which the rate, plan, system, or rule has been applied with respect to the insurance afforded to that person." (Italics added.)