Opinion ID: 1036210
Heading Depth: 2
Heading Rank: 4

Heading: The Viability of Zhang’s UCL Claim

Text: As noted, Zhang‟s UCL claim is premised on allegations of false advertising. She contends California Capital misleadingly advertised that it would timely pay the true value of covered claims. She asserts that its treatment of her claim demonstrated it had no intention of honoring that promise. California Capital‟s demurrer was based on Textron‟s rule that a UCL claim may not be brought for settlement practices prohibited by the UIPA. (Textron, supra, 118 Cal.App.4th at pp. 1070-1071.) California Capital argued that the crux of the UCL claim was improper claims handling, and the allegations of unfair competition and false advertising were nothing more than an attempt to plead around the bar of Moradi-Shalal. In this court, California Capital maintains its insistence that Zhang‟s UCL claim is actually directed at its claims handling, not its advertising. It argues that any bad faith claim might be turned into a false advertising suit, because all insurers at least impliedly promise to pay what they owe under their policies. California Capital urges us to follow Textron and the Safeco line of cases, and to disapprove State Farm.7 However, we hold State Farm consistent, and Textron inconsistent, with our decisions on the scope of UCL liability. 7 The first argument presented in California Capital‟s brief is that no UCL cause of action may be based on an insurer‟s handling of a fire loss claim, because the exclusive remedy in disputes over such claims is the appraisal process provided in section 2071. This sweeping proposition, which would bar not only UCL actions but also the first party fraud and bad faith actions left untouched by Moradi-Shalal, was not raised in the trial court, the Court of Appeal, or the petition for review. We decline to consider it for the first time at this late stage. (See Cal. Rules of Court, rules 8.504(b)(1), 8.516(b), 8.520(b)(2)(B), (3).) 16 In Manufacturers Life, we held that the UIPA does not exempt insurers from liability for anticompetitive conduct, and therefore acts violating both the UIPA and the Cartwright Act could give rise to a UCL claim. (Manufacturers Life, supra, 10 Cal.4th at pp. 279-280, 283-284.) The State Farm court correctly recognized that this reasoning supports claims for UCL relief based on conduct proscribed by the UIPA, if it is independently actionable under the common law of insurance bad faith. (State Farm, supra, 45 Cal.App.4th at p. 1108.)8 In Stop Youth Addiction and Cel-Tech, we explained that to bar a UCL action, another statute must absolutely preclude private causes of action or clearly permit the defendant‟s conduct. (Stop Youth Addiction, supra, 17 Cal.4th at pp. 565-566; Cel-Tech, supra, 20 Cal.4th at pp. 182-183.) Moradi-Shalal itself established that while violations of section 790.03 are themselves not actionable, there is no bar to 8 As the State Farm court also discerned, Manufacturers Life made it clear that after Moradi-Shalal, the provisions of section 790.03 may not be borrowed to serve as a basis for a UCL action, even though section 1861.03 specifies that the “business of insurance” is subject to the provisions of the UCL. (State Farm, supra, 45 Cal.App.4th at p. 1103.) The concurring opinion rejects this proposition, arguing that neither Manufacturers Life nor Moradi-Shalal preclude UCL claims based on UIPA violations. However, were that the case, in Manufacturers Life we would not have limited the grounds for the UCL cause of action to the plaintiff‟s Cartwright Act claims. Our exclusion of the UIPA claims from the analysis was no oversight. (Manufacturers Life, supra, 10 Cal.4th at pp. 283-284.) And in Moradi-Shalal, we identified administrative remedies and traditional common law actions as viable avenues for restraining unfair insurance practices, without mentioning the UCL. (Moradi-Shalal, supra, 46 Cal.3d at pp. 304-305.) We approved the reasoning of