Manufacturers Life Ins. Co. v. Superior Court

Page 424

33 Cal.Rptr.2d 424

Previously published at 27 Cal.App.4th 67, 32 Cal.App.4th 821

27 Cal.App.4th 67, 32 Cal.App.4th 821

MANUFACTURERS LIFE INSURANCE COMPANY et al., Petitioners, v. The SUPERIOR COURT In and For the City and County of San

Francisco, Respondent;

WEIL INSURANCE AGENCY, INC., Real Party in Interest.

WEIL INSURANCE AGENCY, INC., Petitioner, v. The SUPERIOR COURT In and For the City and County of San

Francisco, Respondent;

MANUFACTURERS LIFE INSURANCE COMPANY et al., Real Parties in Interest.

Nos. A052795, A055038.

Court of Appeal, First District, Division 2, California.

July 29, 1994.

Review Granted Oct. 13, 1994.

Townsend and Townsend Khorie and Crew, Eugene Crew, Daniel J. Furniss, Paul F. Kirsch, San Francisco, for Weil Ins. Agency, Inc.

Daniel E. Lungren, Atty. Gen., Roderick Walston, Chief Asst. Atty. Gen., Sanford Gruskin, Sr. Asst. Atty. Gen., Thomas P. Dove, Supervising Deputy Atty. Gen., Jesse W. Markham, Jr., Deputy Atty. Gen., San Francisco, for amicus curiae Ins. Com'r on behalf of Weil Ins.

Jerome B. Falk, Jr., H. Joseph Escher III, Pauline E. Calande, Theresa M. Beiner, Howard, Rice, Nemerovski, Canady, Robertson & Falk, San Francisco, for The Mfrs. Life Ins. Co.

Buchalter, Nemer, Fields & Younger, Marcus M. Kaufman, Hugh A. Linstrom, Los Angeles, for amicus curiae California Chamber of Commerce et al. on behalf of the Mfrs.

No appearance for respondent.

BENSON, Associate Justice. ^*

Plaintiff Weil Insurance Agency, Inc. (Weil), brought this action for damages alleging primarily an unlawful boycott in the sale of annuities used to fund structured settlements of personal injury claims. Various defendants successfully demurred to the complaint, insofar as it asserted statutory causes of action, mainly on the ground that such causes of action are superseded by provisions of the Insurance Code. We have concluded that this contention is unsound and that plaintiff can state a cause of action under the Cartwright Act (Bus. & Prof.Code, §§ 16720, 16721.5). Plaintiff can also state a cause of action under the Unfair Competition Act (Bus. & Prof.Code, §§ 17200 through 17208), insofar as the claim is predicated on a violation of the Cartwright Act. However, plaintiff cannot state a private cause of action under, or predicated on violations of, the Unfair Insurance Practices Act (Ins.Code, §§ 790-790.10).

BACKGROUND

The action concerns plaintiff's attempt to engage in business as a broker of, and consultant in connection with, settlement annuities. A settlement annuity is an annuity purchased by a liability carrier to fund a structured settlement in a personal injury action. A structured settlement is one in which the injury claimant agrees to accept periodic payments (i.e., the proceeds of an annuity) rather than a single lump sum. It appears to be conceded by all concerned that such an annuity is classified in this state as a form of life insurance. (See Ins.Code, § 101.)

The gist of the complaint's allegations contained in the four statutory counts with which we are now concerned is that defendants boycotted plaintiff's brokerage business because of opposition to plaintiff's conduct in providing injury claimants and their attorneys with information concerning the underlying features of settlement annuities, in particular their actual costs. Such disclosures were inimical to a plan defendants had formed to market settlement annuities as a way for liability carriers to settle injury claims below their cash settlement value. Therefore defendants schemed to prevent claimants from acquiring such information. They pursued this scheme, in part, by boycotting and disparaging plaintiff, as a broker and consultant supplying such information to injury claimants.

Plaintiff alleges it built a successful brokerage and consulting business based upon advising and educating claimants and their attorneys in connection with various aspects of settlement annuities including those which concerned defendants. This conduct, however, interfered with defendants' marketing scheme. Accordingly, defendants coerced or induced suppliers of annuities to stop doing business with plaintiff. As a result, plaintiff's settlement annuities business was destroyed.

The first four surviving counts ¹ allege violations of (1) Business and Professions Code section 16720, part of the Cartwright Act; (2) Business and Professions Code section 16721.5, also part of that Act; (3) Insurance Code section 790.03, subdivision (c), part of the Unfair Insurance Practices Act; and (4) Business and Professions Code section 17200 et seq., the Unfair Competition Act (UCA). ² Three other counts sound in tort and are not at issue in these writ proceedings.

In the earliest ruling before us, the trial court sustained demurrers to the Cartwright Act claims (counts 1 and 2) with leave to amend. However, it concluded that plaintiff had stated causes of action under the UIPA and the UCA (counts 4 and 5). Defendants filed petition number A052795 seeking a writ of mandate directing the trial court to sustain the demurrers to these counts. We issued an alternative writ.

While that matter was pending, plaintiff amended the complaint and various defendants again demurred to the Cartwright Act counts. The trial court sustained those demurrers without leave to amend. Plaintiff filed petition number A055038, seeking a writ which would direct the trial court to overrule the demurrers to those counts. We initially denied plaintiff's petition. Plaintiff sought review in the Supreme Court. That court granted the petition and retransferred the matter to us with directions to issue an alternative writ. We have done so.

I. CARTWRIGHT ACT

A. Introduction

The Cartwright Act states a general prohibition against conduct effecting a combination in restraint of trade, i.e., a "trust." (Bus. & Prof.Code, §§ 16720, 16721.5.) One common species of a trust is a "concerted refusal to deal with other traders, or, as it is often called, the group boycott." (Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal.3d 920, 931, 130 Cal.Rptr. 1, 549 P.2d 833.) The prohibition on such conduct extends to "every type of business," including insurance. (Speegle v. Board of Fire Underwriters (1946) 29 Cal.2d 34, 43, 44, 46, 172 P.2d 867; see Marin County Bd. of Realtors, Inc. v. Palsson, supra, 16 Cal.3d at pp. 927-928, 130 Cal.Rptr. 1, 549 P.2d 833.)

At the same time, the UIPA prohibits acts of "boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance." (Ins.Code, § 790.03, subd. (c) (section 790.03(c).) The major issue before us is whether the UIPA supplants the Cartwright Act so as to provide the sole basis by which unlawful conduct of the type alleged here may be subjected to legal restraint or may otherwise produce legal consequences.

In dealing with any problem of statutory effect, we begin and often end with the words of the statute. "[C]ourts are not at liberty to impute a particular intention to the Legislature when nothing in the language of the statute implies such intention." (Dunn-Edwards Corp. v. Bay Area Air Quality Management Dist. (1992) 9 Cal.App.4th 644, 658, 11 Cal.Rptr.2d 850, review den. [rejecting claim of implied exemption from general statute]; see Code Civ.Proc., § 1858.) The statute "must be construed with reference to the whole system of law of which it is a part, so that each part may be harmonized and have effect." (Yoffie v. Marin Hospital Dist. (1987) 193 Cal.App.3d 743, 748, 238 Cal.Rptr. 502, review den.; see Code Civ.Proc., § 1858.) "This rule applies even if the statutes to be harmonized appear in different codes." (Ibid.) "[T]he different codes blend into each other and constitute a single statute for the purposes of statutory construction and ... legislative intent may be determined not only from an individual code but the whole body of law. (Pesce v. Dept. Alcoholic Bev. Control (1958) 51 Cal.2d 310, 312 [333 P.2d 15]; American Friends Service Committee v. Procunier (1973) 33 Cal.App.3d 252, 260 [109 Cal.Rptr. 22].)" (Winzler & Kelly v. Department of Industrial Relations (1981) 121 Cal.App.3d 120, 125, 174 Cal.Rptr. 744.)

As explained in the following discussion, we have concluded that the UIPA expressly preserves existing remedies for unlawful conduct in the business of insurance. Such preservation is consistent with the history of the UIPA and with the interpretational presumption against the implied repeal of statutory remedies. A contrary holding is not warranted by case law or by any claimed legislative ratification. Accordingly, the demurrers to the Cartwright Act claims should have been overruled.

B. Express Preservation of Existing Remedies

The UIPA itself expresses an affirmative intention and expectation that it will preserve intact existing remedies for insurance industry misconduct. Insurance Code section 790.09 states that the commissioner's issuance of a cease and desist order shall not obstruct or impede the imposition of "civil liability or criminal penalty under the laws of this State" arising from the same conduct. ³

Defendants have never offered a plausible interpretation of this statute consistent with the view that the UIPA supersedes the Cartwright Act. To be sure, the statute only refers to situations in which the commissioner issues a cease and desist order. Numerous absurdities would arise, however, if we concluded that the UIPA supersedes other laws in most cases, but preserves existing remedies when the Commissioner issues such an order. This would make the Commissioner's jurisdiction exclusive only so long as it is not exercised--a result which would appear to maximize the potential for jurisdictional conflict without creating any discernible benefit. Under such a regime, mere administrative inaction would cloak all manner of insurance misconduct with immunity. Furthermore, there would be no textual...