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

Heading: Moradi-Shalal

Text: The question before us is the extent to which relief under the UCL is limited by the holding in Moradi-Shalal, supra, 46 Cal.3d 287. There, we reconsidered and abolished a UIPA cause of action that had been approved by Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880 (Royal Globe). The Royal Globe plaintiff was a third party claimant who sued the insurer of property where she was injured. (Royal Globe, at p. 884.) She contended the insurer had violated section 790.03(h)(5) by failing to settle her claim promptly and fairly, and section 790.03(h)(14) by advising her not to obtain the services of an attorney. (Royal Globe, at p. 884.) The Royal Globe court decided that section 790.03(h), 6 enacted in 1959 as part of a comprehensive regulation of the insurance business, permitted third party plaintiffs to sue insurers for unfair acts or practices proscribed by the statute. (Royal Globe, at pp. 884-885.) We overruled Royal Globe in Moradi-Shalal, supra, 46 Cal.3d at page 292. The Moradi-Shalal court noted that Royal Globe was decided by a bare majority. (Moradi-Shalal, at p. 294.) Its decision to permit third party statutory bad faith actions had not been followed by other state courts. (Id. at pp. 297-298.) It had been criticized by legal commentators, and was inconsistent with the drafting history of the Model Unfair Claims Practices Act, from which section 790.03(h) was drawn. (Moradi-Shalal, at pp. 298-299.) Moreover, parts of the legislative history of section 790.03 itself, unmentioned in Royal Globe, indicated that only administrative enforcement by the Insurance Commissioner had been contemplated. (Moradi-Shalal, at p. 300.) Moradi-Shalal also noted that Royal Globe had spawned proliferating litigation, escalating insurance costs, conflicts of interest, complex practical problems, and various analytical difficulties. (Id. at pp. 301-303.) Significant for our purposes is Moradi-Shalal‟s observation that the abrogation of Royal Globe left intact not only administrative remedies, but also traditional common law theories of private recovery against insurers. These include “fraud, infliction of emotional distress, and (as to the insured) either breach of contract or breach of the implied covenant of good faith and fair dealing.” (Moradi-Shalal, 46 Cal.3d at p. 305.) Thus, first party bad faith actions were unaffected by Moradi-Shalal. In Zephyr Park v. Superior Court, supra, 213 Cal.App.3d 833, the court held that Moradi-Shalal‟s bar against actions under section 790.03(h) applied to insureds as well as third party claimants. But it noted that insureds retain the common law cause of action for bad faith settlement practices. (Zephyr Park, at 7 pp. 837-838.) “There is simply no need, therefore, to perpetuate the availability of section 790.03(h) as the basis for first party causes of action.” (Zephyr Park, at p. 838; accord, Tricor California, Inc. v. Superior Court (1990) 220 Cal.App.3d 880, 888.) We cited Zephyr Park with approval in Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 35.