Plaintiffs Troy Peterson and Michael Jackson appeal from the judgment dismissing their case with prejudice after the court sustained the demurrers of defendant Cellco Partnership, doing business as Verizon Wireless, to plaintiffs' (1) unfair competition cause of action under Business and Professions Code section 17200 et seq.
In their second amended complaint, plaintiffs brought a class action against defendant alleging five causes of actions, including claims for unfair business practices under the UCL and unjust enrichment. Plaintiffs alleged that (1) defendant "is a communication equipment vendor pursuant to ... Insurance Code section 1758.69"; (2) defendant offered and sold communication equipment (such as cell phones) and related insurance policies; (3) plaintiffs purchased cell phones and insurance from defendant; and (4) a percentage of each insurance premium paid by defendant's customers "was retained ... or received by defendant as a fee ... or monetary benefit to defendant from the ... insurance provider." Plaintiffs further alleged defendant lacked a license (required under Insurance Code section 1758.6) to offer or sell such insurance.
In their UCL cause of action, plaintiffs alleged defendant violated the UCL by, inter alia, offering and selling insurance while unlicensed to do so. Plaintiffs alleged they had standing to bring the claim because (1) they "suffered injury in fact because defendant ... unlawfully retained ... or received a percentage of the ... insurance premiums paid by plaintiffs as a
In their unjust enrichment cause of action, plaintiffs alleged defendant was "unjustly enriched by its receipt ... or retention of the fee, monetary benefit ... or recurring revenue stream because defendant did not maintain the required license to offer ... or sell the ... insurance and was not lawfully entitled to receive ... or retain any percentage of the ... insurance premium ...."
Plaintiffs prayed, inter alia, for restitution of all funds acquired by defendant in violation of the UCL and "of all ill-gotten gains that have unjustly enriched defendant at the expense of plaintiffs."
Defendant demurred to the second amended complaint, arguing, inter alia, plaintiffs' UCL claim failed to state facts sufficient to constitute a cause of action because (1) under Proposition 64, "only a private plaintiff who `has suffered injury in fact and has lost money or property as a result of such unfair competition' may bring a" UCL claim, (2) plaintiffs' allegation that defendant "received a percentage of the [insurance] premium as a commission" "in no way shows that Plaintiffs incurred monetary loss, and therefore does not satisfy the standing requirements of Proposition 64," and (3) plaintiffs lacked "standing because the allegations of the complaint show that plaintiffs received the benefit of the bargain and have not lost money." Defendant asked the court to take judicial notice of the official voter information guide to Proposition 64. As to plaintiffs' unjust enrichment claim, defendant's demurrer alleged plaintiffs failed to state facts sufficient to constitute a cause of action because plaintiffs received the benefit of the bargain and could not seek a windfall under the guise of restitution.
The court granted defendant's request for judicial notice and sustained, without leave to amend, the demurrer to plaintiffs' UCL cause of action because plaintiff had "been repeatedly unable to state facts supporting the
Defendant subsequently moved for judgment on the pleadings on plaintiffs' unjust enrichment claim in the second amended complaint—plaintiffs' "single remaining theory"—arguing, inter alia, the cause of action (1) was subject to Proposition 64's requirement that a private plaintiff have lost money and have suffered injury, and (2) was based on "alleged violations of insurance licensing statutes" for which there is no private right of action. The court granted the motion with leave to amend, relying on cases holding that no private cause of action exists for such violations of the Insurance Code.
Plaintiffs then filed a third amended complaint alleging solely an unjust enrichment cause of action, once again relying on Insurance Code section 1758.6's prohibition against a communications equipment vendor offering or selling insurance without a license, and claiming defendant was "unjustly enriched by the payment of the fee, commission, profit ... or other form of monetary benefit because defendant... was not authorized to receive ... or accept [such payments] as a result of the offer, sale ... or transaction of communication equipment insurance [and] failed to maintain the proper license ...."
Defendant demurred to the third amended complaint, arguing the claim was "still fundamentally grounded in alleged violations of the Insurance Code." Defendant contended the "Legislature delegated enforcement of the
The court sustained, without leave to amend, defendant's demurrer to plaintiffs' third amended complaint, stating: "The claim for unjust enrichment is based upon violations of the Insurance Code for which no private cause of action exists." The court dismissed plaintiffs' action with prejudice.
Standard of Review
In evaluating a trial court's order sustaining a demurrer, we review the complaint de novo to determine whether it contains sufficient facts to state a cause of action. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [216 Cal.Rptr. 718, 703 P.2d 58].) In doing so, we accept as true all properly pleaded material facts, as well as facts that may be implied from the properly pleaded facts (Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 790 [90 Cal.Rptr.2d 598]), and we also consider matters that may be judicially noticed (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6 [40 Cal.Rptr.3d 205, 129 P.3d 394]). We do not assume the truth of contentions, deductions or conclusions of fact or law. (Ibid.) The plaintiff "bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law" and "must show the complaint alleges facts sufficient to establish every element of [the] cause of action." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 43 [96 Cal.Rptr.2d 354].) "Because standing goes to the existence of a cause of action, lack of standing may be raised by demurrer ...." (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 813 [66 Cal.Rptr.3d 543].)
The Court Properly Sustained Defendant's Demurrer to Plaintiffs' UCL Claim
Plaintiffs contend their second amended complaint "alleged facts sufficient to establish standing to bring their UCL claims," arguing (1) their alleged payment of an "unlawful commission ... represents a distinct and palpable `injury in fact' sufficient to provide standing for their UCL claims"; (2) they alleged "facts showing they lost money as a result of [defendant's] illegal
To support their assertion they suffered injury in fact, plaintiffs rely on Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796 [49 Cal.Rptr.3d 555] (Aron), where the plaintiff Aron rented a truck from U-Haul. At the time, U-Haul supplied each customer with a partially fueled truck and required the customer (in order to avoid refueling charges) to return the truck with the prerental amount of fuel, measured solely by the fuel gauge. (Id. at pp. 800-801.) Aron alleged he returned the truck to U-Haul "with more fuel than he was provided" and "asked for credit or reimbursement for the excess fuel but was refused." (Id. at p. 801.) He alleged "`injury in fact'"—an "economic loss"—because, in the absence of a precise gauge, "the only way to avoid the imposition of U-Haul's charge was to overfill the fuel tank." (Id. at pp. 802-803.) He further alleged "the use of the fuel gauge as the instrument of measurement" did not comply with California law on weights and measurements. (Id. at p. 803.) The appellate court held Aron had standing to file a UCL complaint because his "allegations set forth a basis for a claim of actual economic injury as a result of an unfair and illegal business practice." (Ibid.)
Because plaintiffs failed to allege facts showing injury in fact, we need not address their assertion they met the second requirement for standing—i.e., they lost money as a result of the alleged unfair competition—except to briefly discuss the meaning of the phrase "lost money" in section 17204. In plaintiffs' view, a person has lost money when the money is "no longer in their possession." But this proposed definition encompasses every purchase or transaction where a person pays with money. In Hall, we defined a loss, for purposes of section 17204, as "`[a]n undesirable outcome of a risk; the disappearance or diminution of value, usu. in an unexpected or relatively unpredictable way.'" (Hall, supra, 158 Cal.App.4th at p. 853.) Thus, in Hall, the plaintiff "expended money by paying [the seller] $29.51—but he received a book in exchange"; therefore he did not lose money or suffer injury in fact. (Id. at p. 855.)
Alternatively, plaintiffs argue that, even if they lack the standing prescribed in section 17204, they may bring a UCL action because "a violation of the ... Insurance Code give[s] rise to a cause of action for violation of the UCL." For this proposition they rely on Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466 [37 Cal.Rptr.3d 544] (Wayne) and Stevens v. Superior Court (1999) 75 Cal.App.4th 594 [89 Cal.Rptr.2d 370] (Stevens). We note that the existence of a cause of action does not answer the question of who has standing to bring the claim. And in any case, both Stevens and Wayne are inapposite. The Stevens decision was final prior to the 2004 adoption of Proposition 64. Wayne did not address the issue of the plaintiff's standing to bring a UCL claim. Rather, Wayne considered whether the defendant was exempt from the Insurance Code's licensing requirements under a statutory exception. (Wayne, at pp. 477-478.) In Wayne, the defendant charged the plaintiff an insurance premium that was twice as high as the amount the
The Court Properly Sustained Defendant's Demurrer to Plaintiffs' Unjust Enrichment Claim
Plaintiffs contend they "properly pled facts to support their cause of action for quasi-contract-unjust enrichment" in their third amended complaint, relying on the following pleadings: (1) plaintiffs "conferred a benefit upon" defendant; (2) defendant "knowingly accepted and retained the benefits"; (3) defendant "has been unjustly enriched by the benefit conferred by" plaintiffs; and (4) "it would [be] unjust and unconscionable to permit [defendant] to be enriched at [plaintiffs'] expense."
But plaintiffs assert they need not allege any actual damage to state an unjust enrichment claim. For this proposition they rely on the recent case of County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533 [69 Cal.Rptr.3d 848] (San Bernardino). San Bernardino involved "a political
On appeal the defendants challenged an unjust enrichment award against them, arguing the county "did not incur any damage from the bribery scheme because the County's money was not used to pay the bribes." (San Bernardino, supra, 158 Cal.App.4th at p. 541.) In affirming the award, the appellate court stated in dicta the passage upon which plaintiffs here rely: "`[T]he public policy of this state does not permit one to "take advantage of his own wrong"' regardless of whether the other party suffers actual damage. [Citation.] Where `a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss or, in some cases, any loss, but nevertheless the enrichment of the defendant would be unjust ... the defendant may be under a duty to give to the plaintiff the amount by which [the defendant] has been enriched.'" "The emphasis is on the wrongdoer's enrichment, not the victim's loss. In particular, a person acting in conscious disregard of the rights of another should be required to disgorge all profit because disgorgement both benefits the injured parties and deters the perpetrator from committing the same unlawful actions again." (Id. at p. 542.)
But despite the court's dictum statements that an unjust enrichment victim need not suffer any loss, the evidence in San Bernardino, supra, 158 Cal.App.4th 533, showed "the County suffered a monetary loss" of "millions of dollars" (id. at p. 541), and the money "awarded to the County ... was rightfully the County's." (Id. p. 543.) For, although the county did not directly pay the consultants, the county was the ultimate "source of the money" and "it [could] fairly be said that the entire bribery scheme was `at the expense' of the County and its residents." (Id. at p. 544.)
In another distinguishing point, San Bernardino clarified that "[d]isgorgement of profits is particularly applicable in cases dealing with breach of a fiduciary duty, and is a logical extension of the principle that public officials and other fiduciaries cannot profit by a breach of their duty." (San Bernardino, supra, 158 Cal.App.4th at p. 543.) In sum, San Bernardino's holding does not support plaintiffs' assertion they need not allege any actual injury to bring an unjust enrichment claim.
Plaintiffs contend San Bernardino, supra, 158 Cal.App.4th 533 "found proper an award of damages, on the basis of unjust enrichment, for violation of ... Government Code section 1090, which does not contain a private right of action."
Finally, plaintiffs assert Hirsch v. Bank of America (2003) 107 Cal.App.4th 708 [132 Cal.Rptr.2d 220] (Hirsch) is similar to this case, but in fact it is not. Hirsch held, inter alia, the plaintiffs there "stated a valid cause of action for unjust enrichment based on [the defendant's] unjustified charging and retention of excessive fees" which were passed on to the plaintiffs. (Id. at p. 722.) Thus, Hirsch involved plaintiffs who alleged they paid "overcharges" in the form of excessive fees that were unjustly retained by the defendants at the plaintiffs' expense. (Ibid.) This point, Hirsch's only pertinence to the case before us, is a conclusively distinguishing one.
Plaintiffs lack standing to bring an action under the UCL or under the Insurance Code, and they cannot do so under the guise of unjust enrichment. Moreover, they are not entitled to restitution because they received the benefit of the bargain. The court properly sustained, without leave to amend, defendant's demurrer to plaintiffs' third amended complaint.
The judgment is affirmed. Defendant shall recover its costs on appeal.
Sills, P. J., and Aronson, J., concurred.