Opinion ID: 1265400
Heading Depth: 2
Heading Rank: 1

Heading: Chicago Title.

Text: In reaching its conclusion that, in section 790.09, the UIPA expressly preserved remedies for unlawful conduct in the insurance industry which existed at the time the UIPA was adopted, the Court of Appeal rejected defendants' argument that this court in fact held in Chicago Title that the UIPA exempted insurance from the Cartwright Act and other antitrust related remedies, a proposition which Greenberg v. Equitable Life Assur. Society, supra, 34 Cal. App.3d 994 ( Greenberg ) states was the holding of Chicago Title. The Court of Appeal expressed the view that the statement in Chicago Title on which defendants relied was dictum, and found it to be neither compelling nor persuasive authority. The language in Chicago Title to which defendants and the Court of Appeal refer appears, italicized, in this passage: The Cartwright Act, as previously mentioned, is similar in spirit and substance to the federal legislation encompassed by the Sherman (15 U.S.C.A. §§ 1-7) and Clayton Acts (15 U.S.C.A. §§ 12-27). Private individuals, businesses, or corporations have, in the absence of express statutory authority, no standing to enforce such regulatory statutes. (Cf. Show Management v. Hearst Publishing Co., 196 Cal. App.2d 606, 612-616 [16 Cal. Rptr. 731]; West Coast Poultry Co. v. Glasner, 231 Cal. App.2d 747 [42 Cal. Rptr. 297]; Hudson v. Craft, 33 Cal.2d 654 [204 P.2d 1, 7 A.L.R.2d 696].) The Cartwright Act however follows federal policy which expressly contemplates private civil litigation based upon statutes regulating antitrust and unfair trade practices, including illegitimate pricing practices. (Bus. & Prof. Code, §§ 17040-17051.) These statutes and the common law which once constituted the `protection of the public against combinations in restraint of the insurance trade' ( Speegle v. Board of Fire Underwriters, 29 Cal.2d 34, 45 [172 P.2d 867]) are now expressly superseded and contravened by the specific provisions of the Insurance Code. Counts three (secret rebate), four (discriminatory pricing) and seven (unlawful rebate) clearly concern the regulation of rates charged by title insurers and title companies, and rate regulation has traditionally commanded administrative expertise applied to controlled industries. (Ins. Code §§ 12404-12412; County of Placer v. Aetna Cas. etc. Co., 50 Cal.2d 182 [323 P.2d 753]; Division of Labor Law Enforcement v. Moroney, 28 Cal.2d 344 [170 P.2d 3].) ( Chicago Title, supra, 69 Cal.2d 305, 322-323, italics added.) Defendants argue that the italicized statement is not dictum and that, properly understood, Chicago Title held that Cartwright Act remedies for boycotts and other unlawful practices in the insurance industry had been superseded by the UIPA in section 790.03, subdivision (c). We need not decide here whether the passage to which the Court of Appeal referred was dictum or a holding of the court, however, as the passage did not refer to the UIPA. The Insurance Code provisions which Chicago Title cited are not part of the UIPA and are not in issue here. Even assuming arguendo that the reference in Chicago Title to the superseding impact of Insurance Code provisions was not dictum, the holding was far narrower than defendants suggest. Consideration of the nature of the action in Chicago Title is crucial to understanding that case. It arose on demurrers to the various causes of action stated by the plaintiffs. They sought injunctive relief and damages for unfair trade practices and combinations in restraint of trade, including a boycott of the plaintiffs' business. Plaintiffs were underwritten title companies that did title searches and examinations and prepared certificates or abstracts of title for title insurers, and delivered the title insurance polices issued by the insurers. (See § 12402.) In the counts at issue in the decision, plaintiffs alleged that the defendants [5] violated antitrust laws, and engaged in price discrimination and unfair trade practices. They accused the defendants of conspiring to provide rebates in order to induce customers to transfer business to defendants. After explaining that the counts directed to insurance rates could not state a cause of action because specific provisions of the Insurance Code (which are not part of the UIPA) gave the Insurance Commissioner authority over rates, the court went on to say that several other counts did not state a cause of action and that the factual allegations failed to support the charge. The Court of Appeal concluded for that reason that Chicago Title held only that the allegations of the complaint were insufficient, and that we had not held that the UIPA superseded the Cartwright Act insofar as insurance industry practices are concerned. This court adopted, with modifications, the decision of the Court of Appeal in Chicago Title. Defendants argue that the court necessarily had the UIPA in mind when it stated that the Cartwright Act had been superseded by the specific provisions of the Insurance Code and that the statement referred to all of the counts of the complaint that were directed to insurance company defendants. They base their argument on a passage in the Court of Appeal opinion which, they assert, addressed the jurisdiction of the Insurance Commissioner. This court deleted that passage when it adopted the opinion of the Court of Appeal in Chicago Title, however. Apart from the impropriety of citing and relying on a vacated Court of Appeal opinion, this argument necessarily lacks merit. The opinion of this court in Chicago Title is the sole source of decision and the reasoning underlying the decision. Moreover, deletion of a passage from a Court of Appeal opinion that is adopted by this court may reflect this court's unwillingness to adopt the view of the Court of Appeal on the deleted matter. Defendants also argue that this court's analysis of the adequacy of the allegations of the Chicago Title complaint to state Unfair Practices Act (Bus. & Prof. Code, § 17000 et seq.) violations in counts unrelated to ratemaking addressed only claims made against defendants who were not insurance companies. Therefore, that discussion does not imply that in other circumstances a cause of action for conduct made unlawful by statutes other than the UIPA could be stated against an insurer subject to that act. The discussion in point involved two counts alleging a boycott: Appellants contend in counts six and eight that the conduct of the Sherwood and Great Western groups, respectively, infringes Business and Professions Code section 17046 [part of the Unfair Practices Act]. The attempted application of this section to the facts evidences appellants' misinterpretation of the nature of a boycott. The allegation of boycott cannot be supported in this instance because everyone has the unrestricted right to select customers and sources of supply. (Bus. & Prof. Code, § 17042; A.B.C. Distributing Co. v. Distillers Distributing Corp., 154 Cal. App.2d 175, 189 [316 P.2d 71].) There is not, and could not be an allegation that it is unreasonable for Sherwood to buy through Summit, or for Great Western Financial to require its subsidiaries in the saving and loan or escrow business to engage the services of the title company in which it likewise has an interest. Not only are vertical distribution agreements in this instance contemplated by the Insurance Code, but `it seems clear to us that vertical integration, as such without more, cannot be held violative of the Sherman Act.' [Citation.] Neither do exclusive dealing arrangements constitute boycotts.... ( Chicago Title, supra, 69 Cal.2d 305, 323-324.) This passage contemplates the possibility of a Cartwright Act or Unfair Practices Act claim, and rejects the claim stated by plaintiffs only because the facts alleged did not constitute a violation of either act. Defendants' argument that these counts were not directed against insurance companies and that the discussion anticipates Cartwright Act or Unfair Practices Act claims only against persons or entities that are not engaged in the business of insurance is not supported by the opinion. The Sherwood group to which the court referred included both Summit Title Company and Sherwood Escrow Company. ( Chicago Title, supra, 69 Cal.2d 305, 318.) Summit, an underwritten title company (§ 12340.5 [former § 12402]) was subject to licensing and regulation under provisions of the Insurance Code. (§ 12389.2 [former § 12396, added by Stats. 1965, ch. 361, § 2, p. 1467].) Therefore, if the Chicago Title statement the Court of Appeal here deemed dictum was instead a holding of this court, the holding was much narrower than defendants claim. The court said only that sections of the Insurance Code that are not part of the UIPA superseded other antitrust and unfair competition laws insofar as they might apply to conduct related to rates and ratemaking which are governed by specific provisions of the Insurance Code that authorize some practices and as to others gave the Insurance Commissioner authority to determine the propriety of the conduct. None of the Insurance Code provisions cited by the court in Chicago Title is part of the UIPA and this court did not mention the UIPA in the Chicago Title opinion. Nor did the court say that in section 790.09 the UIPA reflects legislative intent to displace remedies created by the Cartwright Act or other statutes directed to unfair trade practices. Had the court concluded in Chicago Title that the UIPA displaced preexisting legislation in the field and that the insurance industry was thereby exempted from antitrust and other unfair business practices remedies applicable to other industries, there would have been no need to explain in detail, as the court did ( Chicago Title, supra, 69 Cal.2d at pp. 324-325), why the allegations supporting the remaining counts of the complaint were insufficient for other reasons to state causes of action under the Cartwright Act or the Unfair Practices Act. [6]