1

Filed 1/29/21

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

GINA CHU et al.,

Plaintiffs and Appellants,

v.

OLD REPUBLIC HOME 

PROTECTION COMPANY, 

INC.,

Defendant and 

Respondent.

 B302792

 (Los Angeles County

 Super. Ct. No.

 19STCV26689)

APPEAL from a judgment of the Superior Court of the 

County of Los Angeles, Michelle Williams Court, Judge. 

Affirmed.

Hee Sung Yoon, self-represented litigant and for Gina Chu,

Plaintiffs and Appellants.

Claytor Law Group, James D. Claytor for Defendant and 

Respondent.

* Pursuant to California Rules of Court, rules 8.1100 and 

8.1110, this opinion is certified for publication with the exception 

of Discussion Parts C.3 through D.
2

I. INTRODUCTION

Plaintiffs1 appeal from the trial court’s order dismissing 

with prejudice their claims against defendant2 for breach of the 

implied covenant of good faith and fair dealing (bad faith claim) 

and violation of the Unfair Competition Law (Bus. & Prof. Code, 

§ 17200 et seq. (UCL claim)). According to plaintiffs, because the 

contract on which they sued is regulated under the Insurance 

Code,

3 including the Unfair Insurance Practices Act (§ 790 et 

seq.), it should be considered insurance for purposes of tort 

liability and their complaint thus adequately stated a bad faith 

claim. Plaintiffs also argue that the alleged violations of the

regulations promulgated under section 790.03 were sufficient to 

state a UCL claim. We affirm.

II. FACTUAL BACKGROUND4

Plaintiffs owned a condominium in Los Angeles. On an 

unspecified date, defendant issued to plaintiffs a “Home 

Protection Plan” pursuant to which defendant agreed to “provide 

1 Plaintiff Hee Sung Yoon is an attorney who appeared as a 

self-represented litigant and on behalf of plaintiff Gina Chu in 

the trial court.

2 Defendant is Old Republic Home Protection Company, Inc.

3 All further statutory references are to the Insurance Code, 

unless otherwise indicated.

4 The facts are taken from the operative first amended 

complaint.
3

service for covered systems and appliances [within the 

condominium] reported as malfunctioning during the term of the 

[contract] . . . .”5

During the effective period of the contract,6 the 

condominium’s heating, ventilation, and air-conditioning (HVAC) 

system became inoperable. Plaintiffs notified defendant of the 

problem, but defendant would “not allow [p]laintiffs to retain 

their own contractor to repair the HVAC [s]ystem.” Instead, 

defendant engaged its own licensed HVAC contractor to perform 

the repairs. That contractor replaced the air condenser on the 

roof, but failed to inform plaintiffs about the cause of the problem 

or the repairs that were needed. As a result, plaintiffs were 

unaware that defendant’s contractor had replaced the air 

condenser with a system that was incompatible with the air 

handler inside the condominium. The “mis-matched” air 

condenser “caused physical damage to the air handler,” resulting 

in freon leaks.

In December 2017, plaintiffs discovered that their repaired 

HVAC system was not properly heating their condominium. 

They called defendant’s contractor who informed them that the 

system needed freon. In June 2018, plaintiffs noticed that the 

HVAC system was not properly cooling their condominium. They 

5 As explained below, defendant is licensed and regulated 

under the Insurance Code as a “home protection company” and 

the warranty contract that it issued to plaintiffs is referred to as 

a “home protection contract.” (§ 12740, subds. (a) & (b).)

6 The effective date and duration of the contract were not 

specified in the first amended complaint.
4

once again called defendant’s contractor who informed them that 

the system needed additional freon due to a leak.

After plaintiffs first made a claim under their homeowner’s 

insurance policy7 for the breakdown of their HVAC system, they 

retained their own contractor who confirmed that there was a 

leak in the HVAC system. In July 2019, plaintiffs retained a 

second contractor who agreed that the system had a leak and 

further advised that the entire system needed to be replaced. 

The replacement cost of the HVAC system was $8,984.

III. PROCEDURAL BACKGROUND

In August 2019, plaintiffs filed the operative first amended 

complaint that asserted four causes of action against defendant: 

the fourth cause of action for breach of contract; the fifth cause of 

action, the bad faith claim;

8 the sixth cause of action, the UCL

claim; and the seventh cause of action for negligence.

Defendant demurred to each of the four causes of action 

asserted against it. In support of its demurrer to the bad faith 

claim, defendant argued that it was licensed only as a home 

protection company—not as an insurance company—and 

therefore could not be sued in tort for bad faith. As to the UCL 

claim, defendant argued that it was based on alleged violations of 

7 In addition to suing defendant, plaintiffs also sued the 

company that issued their homeowner’s insurance policy.

8 Plaintiffs erroneously alleged two “fourth” causes of action. 

We will refer to the second of the “fourth” causes of action, the 

bad faith claim, as the fifth cause of action.
5

regulations promulgated under section 790.03 which did not 

apply to home protection companies.

The trial court conducted a hearing on November 1, 2019,

and following arguments, took the matter under submission. The 

court then issued a written ruling that overruled the demurrer to 

the fourth and seventh causes of action for breach of contract and 

negligence. On the fifth cause of action, the bad faith claim, the 

court concluded that a home protection contract is not an 

insurance policy and thus sustained the demurrer without leave 

to amend.

On the sixth cause of action, the UCL claim, the trial court 

ruled: “The unfair business practices alleged are violations of 

regulations which apply to insurers. Defendant is not an insurer. 

The demurrer is sustained. Leave to amend will not be granted 

unless plaintiff can establish that facts exist sufficient to state a 

cause of action. [Citation.] Plaintiff[s have] the burden of 

establishing in what manner it would be possible to amend the 

complaint. [Citation.]”

On November 5, 2019, plaintiffs filed a request for 

dismissal without prejudice of the fourth and seventh causes of 

action for breach of contract and negligence, and the dismissal of 

those claims was entered the following day. On 

December 3, 2019, at plaintiffs’ request, the trial court ordered 

the fifth and sixth causes of action for bad faith and violation of 

the UCL dismissed with prejudice.

On December 5, 2019, plaintiffs filed a notice of appeal 

from the judgment of dismissal entered after the order sustaining 

the demurrer.
6

IV. DISCUSSION

A. Standard of Review

“In reviewing the sufficiency of a complaint against a 

general demurrer, we are guided by long-settled rules. ‘We treat 

the demurrer as admitting all material facts properly pleaded, 

but not contentions, deductions or conclusions of fact or law. 

[Citation.] We also consider matters which may be judicially 

noticed.’ (Serrano v. Priest (1971) 5 Cal.3d 584, 591 . . . .) 

Further, we give the complaint a reasonable interpretation, 

reading it as a whole and its parts in their context. (Speegle v. 

Board of Fire Underwriters (1946) 29 Cal.2d 34, 42 . . . .) When a 

demurrer is sustained, we determine whether the complaint 

states facts sufficient to constitute a cause of action. (See Hill v. 

Miller (1966) 64 Cal.2d 757, 759 . . . .)” (Blank v. Kirwan (1985) 

39 Cal.3d 311, 318.)

B. Statutory Scheme Regulating Home Protection Companies

In the mid-1970s, companies in California began marketing 

contracts to service and repair certain components or systems of 

residential structures, usually in conjunction with real estate 

brokers. (Legis. Counsel’s Dig., Sen. Bill No. 2222 (1977–1978 

Reg. Sess.); Sen. Bill No. 2222 (1977–1978 Reg. Sess.), Ch. 1203, 

Legis. Findings; Cal. Dept. of Ins., Enrolled Bill Rep. on Sen. Bill

No. 2222 (1977–1978 Reg. Sess.).) “The vast majority of such 

contracts [had] not been executed as insurance contracts and the 

overwhelming majority of companies offering such contracts [had] 

been doing business in a capacity other than, and [had] been 
7

qualified other than, as admitted insurers.” (Sen. Bill No. 2222

(1977–1978 Reg. Sess.), Ch. 1203, Legis. Findings.) But “[n]o 

specific form of state regulation of this evolving industry” existed 

in California. (Ibid.)

“On May 3, 1978, the Attorney General issued an opinion

that companies offering such contracts were transacting 

insurance, and the issuance of that opinion . . . produced 

uncertainty for the beneficiaries of such existing contracts and for 

those engaged in or related to this industry.” (Sen. Bill No. 2222

(1977–1978 Reg. Sess.), Ch. 1203, Legis. Findings.) Because 

there were more than 100,000 contracts to provide such repair 

services in force at the time of the Attorney General’s opinion, the 

Legislature deemed it necessary to enact a new regulatory 

scheme within the Department of Insurance “for the 

qualification, control and functioning” of the industry. (Ibid.)

The initial draft of the senate bill that would enact that 

regulatory scheme stated that it would provide for the regulation 

of persons engaged in the sale of home maintenance contracts “as 

insurers, subject to specified provisions of the Insurance Code. 

Specifically, [the bill] would (1) define home protection insurance 

as a class of insurance authorized to be transacted in this state 

. . . .” (Sen. Bill No. 2222 (1977–1978 Reg. Sess.) as introduced 

June 7, 1978, italics added.) That initial version also amended 

section 100—which specified the classes of insurance in the 

state—to include a class of “[h]ome protection” insurance. (Sen. 

Bill No. 2222 (1977–1978 Reg. Sess.) as introduced June 7, 1978.) 

It also defined home protection insurance as “insurance against 

the cost of repair or replacement of structural components or 

appliances of a home necessitated by wear and tear or inherent 

defect of any such structural component or appliance, or 
8

necessitated by the failure of an inspection to detect the 

likelihood of any such loss, but shall not include insurance 

against consequential damages arising from the failure of any 

structural component or appliance of a home.” (Ibid., italics

added.)

The final version of the bill, Senate Bill No. 2222 (1977–

1978 Reg. Sess.) (Senate Bill No. 2222), however, deleted the 

references to insurers and insurance, and instead referred to 

home maintenance or warranty contracts as “home protection 

contracts.” (Sen. Bill No. 2222, approved and filed Sept. 26, 1978, 

Sen. Final Hist. (1977–1978 Reg. Sess.) p. 994.) The final version 

also added Part 7 to Division 2 of the Insurance Code,

commencing with section 12740. (Sen. Bill No. 2222, approved 

and filed Sept. 26, 1978, Sen. Final Hist. (1977–1978 Reg. Sess.) 

p. 994.) That new section defined a home protection contract as 

“any contract or agreement whereby, for a predetermined fee, a 

person undertakes for a specified period of time, to repair or 

replace all or any part of any component, system or appliance of a 

home necessitated by wear and tear, deterioration or inherent 

defect, or by the failure of any inspection to detect the likelihood 

of any such loss. [¶] Such contract shall provide for a system of 

service for effectuating such repair or replacement and shall not 

include protection against consequential damage from the failure 

of any component, system or appliance.” (§ 12740.) The section 

also defined a “home protection company” as “any person licensed 

pursuant to this part which issues home protection contracts.” 

(Ibid.)

Newly enacted section 12742 provided that “[h]ome 

protection contracts and home protection companies, and all 

matters incident to or concerned with such contracts and 
9

companies, shall be exclusively subject to and regulated by the 

provisions of this part [namely, Part 7, “Home Protection”] and, 

except as provided in [s]ection 12743, shall not be governed by 

any other provision of this code.” Newly enacted section 12743 

specified the provisions of the Insurance Code applicable to home 

protection contracts and companies, including section 790

“relating to [u]nfair [p]ractices.” Section 12743 further explained 

that the term “‘Insurer’” means a “home protection company” and 

“‘Policy’ or ‘insurance’ [means a] home protection contract.” 

(§ 12743, subd. (j).)

The enrolled bill report on Senate Bill No. 2222 issued by 

the Department of Insurance recommended that the governor 

sign the final version of the bill. (Cal. Dept. of Ins., Enrolled Bill 

Rep. for Sen. Bill No. 2222 (1977–1978 Reg. Sess.) p. 2.) Among

other things, the report explained that Senate Bill No. 2222 

“would create a regulatory scheme for home warranty contracts,

and would specify that they are not considered to be ‘insurance’ 

and that they are subject only to certain other provisions of the 

Insurance Code.” (Cal. Dept. of Ins., Enrolled Bill Rep. for Sen. 

Bill No. 2222 (1977–1978 Reg. Sess.) p. 1.)

C. Bad Faith Claim

1. Legal Principles Re: Insurance Bad Faith

“[I]t is well established that a covenant of good faith and 

fair dealing is implicit in every contract. [Citations.] The essence 

of the implied covenant is that neither party to a contract will do 

anything to injure the right of the other to receive the benefits of 

the contract. [Citations.] [¶] Because the covenant of good faith 
10

and fair dealing essentially is a contract term that aims to 

effectuate the contractual intentions of the parties, ‘compensation 

for its breach has almost always been limited to contract rather 

than tort remedies.’ [Citations.] At present, this court recognizes 

only one exception to that general rule: tort remedies are 

available for a breach of the covenant in cases involving 

insurance policies. [Citations.] In the insurance policy setting, 

an insured may recover damages not otherwise available in a 

contract action, such as emotional distress damages resulting 

from the insurer’s bad faith conduct [citation] and punitive 

damages if there has been oppression, fraud, or malice by the 

insurer [citation].” (Cates Construction, Inc. v. Talbot Partners 

(1999) 21 Cal.4th 28, 43–44 (Cates).)

2. Analogy to Insurance

Plaintiffs contend that because home protection contracts 

fall within the Insurance Code’s definition of insurance, and 

companies that issue insurance can be liable in tort for breach of 

the implied covenant, their fifth cause of action stated a claim for 

insurance bad faith. In support of that conclusion, they cite the 

Attorney General’s 1978 opinion that home protection contracts 

qualify as insurance under the Code, thereby suggesting that the 

Code’s definition controls the issue of whether home protection 

companies are liable for tortious breach of the implied covenant.

As an initial matter, the Attorney General’s 1978 opinion 

was subsequently addressed—and effectively superseded—by the 

statutory scheme enacted in response to it. As the history of that 

scheme shows, the Legislature purposely refrained from 

categorizing home protection contracts as traditional insurance 
11

and provided that only certain of the regulatory provisions of the 

Insurance Code would apply to such contracts. Thus, plaintiffs’ 

reliance on the Attorney General’s opinion to show that home 

protection contracts are insurance is misplaced.

Moreover, as plaintiffs acknowledge, whether a contract 

qualifies as insurance under the Insurance Code for regulatory 

purposes is not dispositive of the tort liability issue. As the court 

in Cates, supra, 21 Cal.4th 28 observed, “the inclusion of a 

particular contract in the Insurance Code for regulatory purposes 

does not require its classification as insurance for other 

purposes.” (Id. at p. 51.) Instead, when analyzing whether a 

given type of contract constitutes insurance for purposes of tort 

liability, courts “must evaluate whether policy considerations 

recognized in common law support the availability of tort 

remedies in the context of [that type of contract].” (Id. at p. 52.) 

The court in Cates explained that “tort recovery is considered 

appropriate in the insurance policy setting because such 

contracts are characterized by elements of adhesion and unequal 

bargaining power, public interest and fiduciary responsibility.”

(Ibid.)

Here, an evaluation of the policy considerations underlying 

tort liability in the traditional insurance context demonstrates 

that home protection contracts are not sufficiently analogous to 

insurance to support the imposition of tort liability.

a. Adhesion and Unequal Bargaining Power

There is nothing in the record to suggest that sellers and 

buyers of residential property who enter into home protection 

contracts lack meaningful bargaining power. To the contrary, the 
12

statutory scheme that regulates home protection contracts

indicates that they “have in most instances been concluded in 

relation to the transfer of residential properties . . . .” (Sen. Bill 

No. 2222 (1977–1978 Reg. Sess.), Ch. 1203, Legis. Findings, 

p. 981.)9 As such, they are incidental to the negotiation of a sales 

contract in which the buyer and seller are ordinarily bargaining 

at arms-length with relatively equal bargaining power. Further, 

parties to a residential sales negotiation can conclude that 

transaction without also entering into a home protection contract. 

As a result, such contracts do not appear to be the product of 

disparate bargaining power that would otherwise support the 

imposition of tort remedies.

b. Fiduciary Responsibility and Public Interest

As acknowledged by the court in Cates, supra, 21 Cal.4th 

28, “a principal basis for recognizing tort liability in the context of 

liability insurance [is] the insurer’s assumption of the insured’s 

defense and settlement negotiations of third party claims 

[citations] . . . ,” which responsibilities give rise to fiduciary or 

quasi-fiduciary obligations on the part of the insurer. (Id. at 

p. 56.) In the context of home protection contracts, those types of 

responsibilities do not arise on the part of the companies that 

issue them. Home protection companies do not undertake the 

9 Prior to 1978, home protection contracts had “largely been 

sold to sellers of residential properties for the benefit of the 

purchasers,” a practice which suggests that those contracts were 

intended to enhance the marketability of the seller’s property. 

(Cal. Dept. of Ins., Enrolled Bill Rep. on Sen. Bill 2222 (1977–

1978 Reg. Sess.) p. 2.)
13

quasi-fiduciary responsibilities of defending homeowners or 

settling claims against them; instead, their duties to homeowners 

are limited to the repair, or if necessary, the replacement of 

specifically covered home systems or appliances. The absence of 

such quasi-fiduciary policy considerations also supports the 

conclusion that home protection companies should not be subject 

to additional tort remedies for breaches of their repair and 

replacement obligations under home protection contracts.

In Cates, supra, 21 Cal.4th 28, the court also explained that 

tort remedies are available in the insurance policy context 

because they further the public interest. The court observed that 

“insurance is a ‘quasi-public’ service” (id. at p. 54) because 

insureds seek “protection against calamity,” not mere commercial 

advantage (id. at p. 53 [“the typical insurance policy protects an 

insured against accidental and generally unforeseeable losses 

caused by a calamitous or catastrophic event such as disability, 

death, fire, or flood”]). They therefore purchase insurance 

protection against such events primarily for peace of mind and 

security. (Id. at p. 44.)

Unlike insurance policies that protect against calamity or 

catastrophe, the home protection contracts at issue promise to 

repair or replace covered home systems, such as plaintiffs’ HVAC 

system, or appliances, such as refrigerators, ovens, or water 

heaters. Although, by obtaining the benefits of such a contract as 

part of a home purchase, a homeowner may procure a degree of 

economic protection against repair or replacement costs, it is not 

the same protection against the economic dilemma an insured 

faces after a catastrophic loss or accident. In the latter scenario, 

the imposition of tort remedies is necessary to induce the 

insurer’s performance of its defense and indemnity obligations or 
14

to compensate fully the insured for an insurer’s bad faith breach 

of the implied covenant. By contrast, if a home protection 

company breaches its contractual duty to repair or replace a 

covered system or appliance that malfunctions, contract damages 

would seem to compensate the homeowner adequately for the 

type of damages contemplated by the parties at the time of 

contracting—in other words—repair or replacement costs.

c. Consequences of Allowing Tort Recovery

In Cates, supra, 21 Cal.4th 28, the court, in evaluating 

whether tort liability should be imposed upon a commercial 

surety company, also considered the practical consequences of 

imposing tort remedies in the context of those types of surety 

contracts. (Id. at pp. 57–59.) As defendant notes, consideration 

of such consequences in the context of home protection contracts 

demonstrates that treating home protection companies as 

insurers—liable in tort as well as contract—could have adverse 

financial consequences similar to those the Legislature sought to 

avoid in 1978.

In response to the Attorney General’s opinion that home 

protection companies should be treated as insurers, the 

Department of Insurance expressed concern about the financial 

impact of licensing such companies as regulated insurers. It 

estimated that the financial requirements that would be imposed 

on such companies as insurers would drive the majority of them 

out of business. Plaintiffs nevertheless urge us to impose 

additional tort liability on these companies. We decline and 

instead conclude that home protection companies are not 
15

sufficiently analogous to traditional insurers to warrant tort 

remedies.

3. Violations of Section 790 as Bad Faith

Plaintiffs argue that because home protection companies 

are subject to section 790 and some of the regulations 

promulgated thereunder, they should be subject to bad faith tort 

liability for violations of those regulations. But, as we explain 

above, the fact that the Insurance Code may regulate a company 

is not dispositive of whether that company should be subject to 

the same tort liability as traditional insurance companies. 

Rather, that issue is determined based on the policy

considerations set forth in Cates, supra, 21 Cal.4th 28 and 

regardless of whether home protection companies are subject to 

certain Insurance Code regulations.

4. Judicial Estoppel

Plaintiffs next contend that defendant is barred under the 

doctrine of judicial estoppel from denying that home protection 

contracts constitute insurance for purpose of bad faith liability. 

According to plaintiffs, in Campion v. Old Republic Home 

Protection Co., Inc. (S.D. Cal. 2012) 861 F.Supp.2d 1139 

(Campion), defendant successfully advocated the position that its 

home protection contracts were consistent with the concept of 

insurance. Plaintiffs therefore conclude that, because defendant 

benefitted from that position in the Campion case, it cannot take 

an inconsistent position on the insurance issue in this action.
16

a. Background

In opposition to the demurrer, plaintiffs cited the federal 

district court ruling in Campion, supra, 861 F.Supp.2d 1139 and 

argued that the court in that case “reached the same conclusion 

[that] the Attorney General” reached in 1978, i.e., home 

protection contracts are insurance. In its reply, defendant 

distinguished Campion and argued that “the issue of whether a 

[h]ome [p]rotection [p]lan was ‘[i]nsurance’ was not before the 

[c]ourt in Campion; rather, the issue was whether a [h]ome 

[p]rotection [p]lan was a ‘good’ or ‘service’ within the meaning of 

[the Consumers Legal Remedies Act (Civil Code section 1750 et 

seq. (the Act))],” such that home protection companies were 

subject to liability for alleged violations of that Act.

At oral argument, following a colloquy regarding the legal 

sufficiency of plaintiffs’ bad faith claim, their counsel asserted as 

follows: “Now, what’s interesting about [Campion] is, in [that 

case, defendant] was sued under [the Act], and there [is] a line of 

cases, including some Supreme Court authority, that [has] held 

that insurance is neither a good nor service. So [insurance 

policies are] not subject to [the Act]. And, in [Campion, 

defendant] argued, ‘We’re not subject to the [the Act] because 

what we essentially issue[] are . . . insurance policies.’ So we 

have a situation where [defendant], in one case, saying ‘We issue 

insurance policies,’ and now in this case, they [are] saying, ‘Just 

kidding. What we issue[] [are] not insurance policies at all,’ and I 

do have [defendant’s] brief in [the Campion] case where 

[defendant] said, ‘Hey, [defendant is] an insurance [company] 

under . . . section 22, and the Attorney General agreed with 

[defendant] . . . ,’ and now [defendant] take[s] a completely 
17

inconsistent position, and I can provide further briefing on that 

[judicial estoppel issue] if the court would like.”

In response, the trial court indicated that it did not need 

further briefing. Defendant’s counsel then stated “if [plaintiffs’ 

counsel is] arguing judicial estoppel in this case, I [have] not seen 

that before and would, therefore, have some difficulty with

replying on the fly as to that argument, and [to] the brief that 

[plaintiffs’ counsel represents] was before the court [in Campion] 

and [counsel is also] making representations about things outside 

of the record.”

Following those comments, the trial court took the matter 

under submission without further argument or briefing. The 

court then issued its final ruling on the demurrer without 

expressly addressing plaintiffs’ belated claim of judicial estoppel.

b. Forfeiture

Defendant maintains that plaintiffs forfeited their judicial 

estoppel argument by failing to timely or adequately raise it in 

opposition to the demurrer. We agree.

“The forfeiture rule generally applies in all civil and 

criminal proceedings. [Citations.] The rule is designed to 

advance efficiency and deter gamesmanship. As we explained in 

People v. Simon (2001) 25 Cal.4th 1082 . . . : ‘“‘“The purpose of 

the general doctrine of waiver [or forfeiture] is to encourage a 

defendant to bring errors to the attention of the trial court, so 

that they may be corrected or avoided and a fair trial had . . . .”’ 

[Citation.] ‘“No procedural principle is more familiar to this 

Court than that a constitutional right,” or a right of any other 

sort, “may be forfeited in criminal as well as civil cases by the 
18

failure to make timely assertion of the right before a tribunal 

having jurisdiction to determine it.” . . .’ [Citation.] [¶] ‘The 

rationale for this rule was aptly explained in Sommer v. Martin

(1921) 55 Cal.App. 603 at page 610 . . . : “‘In the hurry of the trial 

many things may be, and are, overlooked which would readily 

have been rectified had attention been called to them. The law 

casts upon the party the duty of looking after his legal rights and 

of calling the judge’s attention to any infringement of them. If 

any other rule were to obtain, the party would in most cases be 

careful to be silent as to his objections until it would be too late to 

obviate them, and the result would be that few judgments would 

stand the test of an appeal.’”’ [Citation.]” (Fn. omitted; 

[citations].)’ [Citation.]” (Keener v. Jeld-Wen, Inc. (2009) 46 

Cal.4th 247, 264.)

Plaintiffs cited and argued the decision in Campion, supra, 

861 F.Supp.2d 1139 in their opposition, but did not make any 

argument based on the doctrine of judicial estoppel. It was not 

until the end of oral argument that they raised the issue, based 

in part on documents outside the record on the demurrer. And, 

although plaintiffs sought leave to brief the issue, the trial court 

denied leave and did not consider the estoppel issue in its final 

ruling. Moreover, defendant objected to the timing of the judicial

estoppel argument and claimed prejudice from the late notice of 

the contention, including the fact that plaintiffs were relying on 

documents that had not been served or filed with the court.

Under these circumstances, neither the trial court nor 

defendant’s counsel had an adequate opportunity to consider or 

address the estoppel argument. And, plaintiffs make no attempt 

to excuse their delay in raising the issue or otherwise address the 

prejudice that would have resulted from the belated disclosure. 
19

We therefore conclude that they have forfeited the contention on 

appeal.

D. UCL Claim

1. Legal Principles

The UCL “defines ‘unfair competition’ to include ‘any 

unlawful, unfair or fraudulent business act or practice.’ ([Bus. &

Prof. Code] § 17200.) Its coverage is ‘sweeping, embracing 

“‘anything that can properly be called a business practice and 

that at the same time is forbidden by law.’”’ [Citations.] It 

governs ‘anti-competitive business practices’ as well as injuries to 

consumers, and has as a major purpose ‘the preservation of fair 

business competition.’ [Citations.] By proscribing ‘any unlawful’ 

business practice, ‘[Business and Professions Code] section 17200 

“borrows” violations of other laws and treats them as unlawful 

practices’ that the unfair competition law makes independently 

actionable. [Citations.]

“However, the law does more than just borrow. The 

statutory language referring to ‘any unlawful, unfair or

fraudulent’ practice (italics added) makes clear that a practice 

may be deemed unfair even if not specifically proscribed by some 

other law. ‘Because Business and Professions Code section 17200 

is written in the disjunctive, it establishes three varieties of 

unfair competition—acts or practices which are unlawful, or 

unfair, or fraudulent. “In other words, a practice is prohibited as 

‘unfair’ or ‘deceptive’ even if not ‘unlawful’ and vice versa.”’ 

[Citations.]” (Cel-Tech Communications, Inc. v. Los Angeles 

Cellular Telephone Company (1999) 20 Cal.4th 163, 180.)
20

2. Analysis

Relying on Zhang v. Superior Court (2013) 57 Cal.4th 364, 

plaintiffs contend that because violations of section 790.03 and 

the regulations promulgated thereunder can be the basis of an 

unlawful business practice under the UCL, the sixth cause of 

action stated a claim for relief. Plaintiffs generally alleged in the 

sixth cause of action that defendant’s “business practices of 

processing claims in violation of [section 790 et seq.] and [the]

regulations promulgated thereunder constitute[d] an unlawful 

and unfair business practice[] in violation of [the UCL].” The 

only specific regulatory violations mentioned in the complaint, 

however, were in connection with the fifth cause of action for bad 

faith, which alleged that defendant violated various provisions of 

California Code of Regulations, title 10, section 2695.9

(regulation 2695.9). We thus consider whether regulation 2695.9 

applies to defendant such that a violation of its provisions 

constitutes an unfair business practice.

“‘Generally, the same rules of construction and 

interpretation which apply to statutes govern the interpretation

of rules and regulations of administrative agencies.’ [Citation.] 

‘The fundamental rule of interpretation is to ascertain the intent 

of the agency issuing the regulation so as to effectuate the 

purpose of the law.’ [Citation.] ‘In order that legislative intent be 

given effect,’ a regulation, like a statute, ‘should be construed 

with due regard for the ordinary meaning of the language used 

and in harmony with the whole system of law of which it is a 

part.’ [Citation.]” (Hoffman v. Smithwoods RV Park, LLC (2009) 

179 Cal.App.4th 390, 399.)
21

As we discuss above, section 12743 specified the provisions 

of the Insurance Code applicable to home protection contracts 

and companies, including section 790. The Insurance 

Commissioner has promulgated regulations at Code of 

Regulations, Title 10, Chapter 5, Subchapter 7.5, that apply to 

the “handling or settlement of all claims.” (Cal. Code Regs., 

tit. 10, § 2695.1, subd. (b).) These regulations purport to apply to 

home protection contracts and home protection companies. (Cal.

Code Regs., tit. 10, § 2695.1.) Indeed, California Code of 

Regulations, title 10, sections 2695.3 to 2695.7 regulate the 

conduct of all regulated insurers and licensees, including home 

protection companies.10 California Code of Regulations, title 10, 

sections 2695.8 to 2695.11, however, by their express terms, 

apply only to particular classes of insurance. (Cal. Code Regs., 

tit. 10, §§ 2695.81–2695.85.) For example, California Code of 

Regulations, title 10, section 2695.8 sets forth “Additional 

Standards Applicable to Automobile Insurance” and the 

regulations that follow, sections 2695.81 to 2695.85, have no 

apparent applicability to home protection contracts.11 (Cal. Code 

10 California Code of Regulations, title 10, section 2695.3 is 

entitled “File and Record Documentation;” section 2695.4 is 

entitled “Representation of Policy Provisions and Benefits;” 

section 2695.5 is entitled “Duties upon Receipt of 

Communications;” section 2695.6 is entitled “Training and 

Certification;” and section 2695.7 is entitled “Standards for 

Prompt, Fair and Equitable Settlements.”

11 For instance, California Code of Regulations, title 10, 

section 2695.85 requires that “[e]very insurer that issues 

automobile liability or collision insurance policies shall provide 
22

Regs., tit. 10, §§ 2695.81–2695.85.) Thus, the organization of 

these regulations suggests that regulation 2695.9 does not apply 

to all insurers and licensees under the Insurance Code. (Upland 

Police Officers Assn. v. City of Upland (2003) 111 Cal.App.4th 

1294, 1304 [“‘[W]e do not construe statutes in isolation, but 

rather read every statute “with reference to the entire scheme of 

law of which it is part so that the whole may be harmonized and 

retain effectiveness.” [Citation.]’”].)

Regulation 2695.9 is entitled “Additional Standards 

Applicable to First Party Residential and Commercial Property 

Insurance Policies” and subdivision (a) provides: “When a 

residential or commercial property insurance policy provides for 

the adjustment and settlement of first party losses based on 

replacement cost, the following standards apply: . . . .” (Cal. 

Code Regs., tit. 10, § 2695.9, subd. (a), italics added.) The term 

“property insurance policy” is not defined in California Code of 

Regulations, title 10, section 2695.2. Section 10087, subdivision 

(a) provides: “As used in this chapter [Chapter 8.5, Earthquake 

Insurance], ‘policy of residential property insurance’ shall mean a 

policy insuring individually owned residential structures [and] 

individually owned condominium units . . . . A policy that does 

not include any of the perils insured against in a standard fire 

policy shall not be included in the definition of ‘policy of 

residential property insurance.’” Section 2071 sets forth the 

standard form for fire insurance, and provides that the policy 

shall insure “against all LOSS BY FIRE, LIGHTNING AND BY 

REMOVAL FROM PREMISES ENDANGERED BY THE 

PERILS INSURED AGAINST IN THIS POLICY, EXCEPT AS 

the named insured(s) with an Auto Body Repair Consumer Bill of 

Rights . . . .”
23

HEREINAFTER PROVIDED . . . .” By contrast, section 12762 

lists the required contents of a “home protection contract,” and 

lists no specific perils associated with the contract. Although the 

definition for property insurance policy set forth at section 10087 

is limited to its use in chapter 8.5, other provisions of the 

Insurance Code also refer to section 10087’s definition of “‘policy 

of residential property insurance.’” (See, e.g., §§ 396, subd. (f), 

790.031, 1625.5, 1763.1, 10104, subd. (a).) We thus conclude that 

a home protection contract is not a “property insurance policy.”

Because a home protection contract is not a “property 

insurance policy,” regulation 2695.9 does not apply to defendant. 

Further, because plaintiffs’ UCL claim is premised on their 

contention that defendant violated various subparts of regulation 

2695.9, that claim fails as a matter of law.
24

V. DISPOSITION

The judgment is affirmed. Defendant is awarded costs on 

appeal.

KIM, J.

We concur:

RUBIN, P. J.

BAKER, J.
1

Chu et al. v. Old Republic Home Protection Company

B302792

RUBIN, P. J., Concurring:

I agree with the majority decision, which I have signed. I

write separately for a limited reason.

The court’s opinion discusses a number of policy

considerations and market factors that may have supported the

Legislature’s decision to amend the Insurance Code in 1978. Our

present analysis of the statutory scheme primarily relies on

legislative, administrative and judicial precedents that are for

the most part over 20 years old, some much older. For example,

the Attorney General’s opinion was issued in 1978. The

Legislature’s response was to enact in the same year Insurance

Code section 12740 et seq. Two of the substantive provisions of

that law are sections 12742 and 12743. The former has never

been amended; the latter was last amended in 1981. Our opinion

also relies on a 1999 commercial surety bond case, Cates

Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28. It may

be time for the Legislature to consider the relationship between

insurance and home warranty contracts in light of present day

economic realities and the manner in which home warranty

contracts are currently marketed and utilized.

RUBIN, P. J.