Hartford Fire Ins. Co. v. Superior Court

36 Cal.Rptr.3d 279

134 Cal.App.4th 649

HARTFORD FIRE INS. CO. et al., Petitioners, v. SUPERIOR COURT of San Francisco County, Respondent Scott C. Turner, Real Party in Interest.

No. A109257.

Court of Appeal, First District, Division 1.

November 30, 2005.

Howard, Rice, Nemerovski, Canady, Falk & Rabkin, H. Joseph Escher III, Jason M. Skaggs, San Francisco, for Petitioners, Hartford Fire Insurance Company, Hartford Accident & Indemnity Company, Hartford Casualty Insurance Company, Hartford Insurance Company of the Midwest, Hartford Underwriters Insurance Company, First State Insurance Company, Nutmeg Insurance Company, Pacific Insurance Company, Ltd., Twin City Fire Insurance Company.

Sonnenschein, Nath & Rosenthal, Paul E.B. Glad, Gayle M. Athanacio, Cheryl Dyer Berg, San Francisco, for Petitioners, Allianz Insurance Company, Fireman's Fund Insurance Company, The American Insurance Company, Interstate Indemnity Company, National Surety Corporation, Fireman's Fund Insurance Company of Ohio, Monticello Insurance Company.

Bingham McCutchen, Robert A. Lewis, John D. Pernick, San Francisco, for Petitioners, AIU Insurance Company, American Home Assurance Company, Landmark Insurance Company, National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Granite State Insurance Company, Lexington Insurance Company.

No appearance for respondent, Superior Court of San Francisco County.

Scott C. Turner, Law Office of Scott C. Turner, Kimberly A. Kralowec, The Furth Firm, San Francisco, for Real Party in Interest.

STEIN, Acting P.J.

Scott Turner, an attorney, brought suit against petitioners, three groups of insurance companies, in separate but consolidated actions, alleging violations of California's Unfair Competition Law (UCL) (Bus. & Prof.Code, § 17200 et seq.). The suit, brought on behalf of the general public, claims that petitioners pay insurance brokers an annual sum of money based upon the volume of business the broker has generated for the insurance company, conduct Turner characterizes as an "illegal kickback." Turner's complaints do not allege that Turner has suffered actual injury, or loss of property or money, as a result of petitioners' conduct.

When Turner filed suit, the UCL allowed private parties to bring UCL suits on behalf of the general public. On November 2, 2004, California's voters approved Proposition 64, which, as relevant, repealed the provision permitting suit on behalf of the general public, replacing it with a provision allowing a private party to bring a UCL action only if the person filing suit "has suffered injury in fact and has lost money or property as a result of such unfair competition." (Bus. & Prof.Code, § 17204.) In light of the change in the law, petitioners filed a motion in the superior court, seeking judgment on the pleadings on the grounds that Turner lacked standing to pursue his claims. The superior court denied the motion. Petitioners seek to overturn that ruling.

I.

There is a split in authority on the effect of Proposition 64 on cases not final as of the proposition's effective date. Courts in the Second and Fourth Districts have held that Proposition 64 applies to pending litigation, requiring dismissal of section 17200 suits brought by persons who have not themselves suffered actual injury as a result of the alleged unfair business practice. (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1262, 29 Cal.Rptr.3d 521 (Huntingdon); Thornton v. Career Training Center, Inc. (2005) 128 Cal.App.4th 116, 127, 26 Cal.Rptr.3d 723; Frey v. Trans Union Corp. (2005) 127 Cal.App.4th 986, 998, 26 Cal.Rptr.3d 336; Lytwyn v. Fry's Electronics, Inc. (2005) 126 Cal.App.4th 1455, 1480, fn. 13, 25 Cal.Rptr.3d 791; Branick v. Downey Savings & Loan Assn. (2005) 126 Cal.App.4th 828, 24 Cal.Rptr.3d 406; Bivens v. Corel Corp. (2005) 126 Cal.App.4th 1392, 1404-1405, 24 Cal.Rptr.3d 847 (Bivens); Benson v. Kwikset Corp. (2005) 126 Cal.App.4th 887, 902-903, 24 Cal.Rptr.3d 683.) The Second Division of this court agreed in Schwartz v. Visa Internat. Service Assn. (2005) 132 Cal.App.4th 1452, 1463, 34 Cal.Rptr.3d 449 (Schwartz). In Californians for Disability Rights v. Mervyn's (2005) 126 Cal.App.4th 386, 24 Cal.Rptr.3d 301 (Mervyn's), however, the Fourth Division of this court reasoned that because there is no clear expression of legislative or voter intent that Proposition 64 be applied retroactively, it should not be applied to pending claims. One court in the Second District similarly reasoned that Proposition 64 should not apply to pending claims in the absence of an express intent to repeal existing legislation. (Consumer Advocacy Group, Inc. v. Kintetsu Enterprises of America (2005) 129 Cal.App.4th 540, 573, 28 Cal.Rptr.3d 775.) The Supreme Court has granted review in all of these cases, except for Huntingdon, supra, 129 Cal.App.4th 1228, 29 Cal.Rptr.3d 521, and Schwartz, supra, 132 Cal.App.4th 1452, 34 Cal.Rptr.3d 449.

It is well-established that statutes are not to be given a retrospective operation unless it clearly appears that such was the legislative intent. (Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1207, 246 Cal.Rptr. 629, 753 P.2d 585 (Evangelatos); Aetna Cas. & Surety Co. v. Ind. Acc. Comm. (1947) 30 Cal.2d 388, 393, 182 P.2d 159 (Aetna).) There is little in Proposition 64 itself, or in the relevant proposition and ballot materials, expressing legislative or voter intent on the question of whether the change in the law was to apply to pending litigation. Turner therefore contends that applying Proposition 64 to pending litigation would be an unauthorized retrospective application of law.

There is, however, a second legal principle. "[W]hen a pending action rests solely on a statutory basis, and when no rights have vested under the statute, `a repeal of such a statute without a saving clause will terminate all pending actions based thereon.' [Citation.]" (Governing Board v. Mann (1977) 18 Cal.3d 819, 829, 135 Cal.Rptr. 526, 558 P.2d 1.) The Supreme Court reaffirmed this principle—sometimes called the "statutory repeal rule"—in (Younger v. Superior Court (Younger) (1978) 21 Cal.3d 102, 109, 145 Cal.Rptr. 674, 577 P.2d 1014.) A remedy conferred by statute does not vest until final judgment. (South Coast Regional Com. v. Gordon (1978) 84 Cal.App.3d 612, 619, 148 Cal.Rptr. 775.) Therefore, "[a] repeal of the statute, or an amendment thereof, resulting in a repeal of the statutory provision under which the cause of action arose wipes out the cause of action unless the same has been merged into a final judgment." (Wolf v. Pacific Southwest Etc. Discount Corp. (1937) 10 Cal.2d 183, 185, 74 P.2d 263.) The justification for this rule was stated in Callet v. Alioto (1930) 210 Cal. 65, 67-68, 290 P. 438 (Callet): "[A]ll statutory remedies are pursued with full realization that the legislature may abolish the right to recover at any time.[¹] [Citation.] This rule only applies when the right in question is a statutory right and does not apply to an existing right of action which has accrued to a person under the rules of the common law, or by virtue of a statute codifying the common law. In such a case, it is generally stated, that the cause of action is a vested property right which may not be impaired by legislation. In other words, the repeal of such a statute or of such a right, should not be construed to affect existing causes of action. [Citations.]"

While we have not previously grappled with the effect of Proposition 64 on pending cases, we recognized and applied the statutory repeal rule recently in Northern Cal. Carpenters Regional Council v. Warmington Hercules Assocs. (2004) 124 Cal.App.4th 296, 302, 20 Cal.Rptr.3d 918 (Warmington) and Physicians Com. for Responsible Medicine v. Tyson Foods, Inc. (2004) 119 Cal.App.4th 120, 125-126, 13 Cal.Rptr.3d 926. In Warmington, we held: "The general canon of interpretation is `that statutes are not to be given a retrospective operation unless it is clearly made to appear that such was the legislative intent.' [Citation.] The repeal of a statutory remedy, however, presents entirely distinct issues. `A well-established line of authority holds: "`"The unconditional repeal of a special remedial statute without a saving clause stops all pending actions where the repeal finds them. If final relief has not been granted before the repeal goes into effect it cannot be granted afterwards, even if a judgment has been entered and the cause is pending on appeal. The reviewing court must dispose of the case under the law in force when its decision is rendered."'"'" (Warmington, supra, 124 Cal.App.4th at pp. 301-302, 20 Cal.Rptr.3d 918, italics in the original.)

The "statutory repeal rule" is not an exception to the general rule against retrospective application of the law, but a recognition that the general rule applies only to vested rights. A "retroactive or retrospective law" is one affecting rights, obligations, acts, transactions and conditions which are performed or exist prior to the adoption of the statute. (Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828, 839, 123 Cal.Rptr.2d 40, 50 P.3d 751 (Myers); Evangelatos, supra, 44 Cal.3d at pp. 1193-1194, 246 Cal.Rptr. 629, 753 P.2d 585; Aetna, supra, 30 Cal.2d at p. 393, 182 P.2d 159.) As the court explained in Callet, supra, 210 Cal. at page 68, 290 P. 438, a common law cause of action or remedy is a vested cause of action or remedy. Legislation that interferes with such a cause of action or remedy, accordingly, is a retrospective application of the law, and cannot stand in the absence of a clear expression of legislative intent. Unlike a common law right, "[a] statutory remedy does not vest until final judgment." (South Coast Regional Com. v. Gordon, supra, 84 Cal.App.3d at p. 619, 148 Cal.Rptr. 775.) The repeal of the enabling statute does not alter a vested right, and therefore is not a retroactive...