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

Heading: Legislative history and administrative construction of the UIPA.

Text: (1a) Defendants offer a construction of section 790.09 which, they argue, demonstrates that in adopting the UIPA, the Legislature intended that only the Insurance Commissioner be authorized to remedy unlawful conduct by insurance companies. They argue that in providing that a cease-and-desist order does not relieve a person of civil or criminal liability, section 790.09 simply gives nonpreclusive effect to administrative cease and desist orders that are followed by further action by the Insurance Commissioner, and the section has no relevance to the issues in this case. In their view section 790.09 means only that the issuance of a cease and desist order by the Insurance Commissioner does not preclude other action by the commissioner directed to the same impermissible trade practice. Defendants argue that the Court of Appeal erred in its construction of section 790.09 when that court concluded that the section stated that the commissioner's issuance of a cease and desist order shall not obstruct or impede the imposition of civil liability or criminal penalties. They perceive a crucial difference in the actual language of the statute which provides that such orders do not relieve or absolve a person from imposition of civil liability or criminal penalties. That distinction, defendants claim, precludes viewing section 790.09 as a savings clause and demonstrates that its purpose is merely to provide that cease and desist orders do not have a preclusive effect. We agree that the definitions of the words used in the two phrases differ. (2) Absolve is defined as to set free from an obligation or the consequences of guilt. (Webster's New Collegiate Dict. (1981) p. 969.) (3) Obstruct means to block or close up by an obstacle, (4) while impede means to interfere with or slow the progress of. ( Id. at p. 570.) (1b) We fail to find in those distinctions the crucial difference noted by defendants and do not agree with defendants that relieve or absolve is beyond question language of res judicata and claim preclusion. Defendants cite no statute or case using those terms in reference to res judicata and claim preclusion and we are aware of none. The definition of relieve and absolve offered by defendants leads us to the same conclusion reached by the Court of Appeal. The issuance of a cease-and-desist order enjoining future unlawful conduct does not free the offender from the civil obligation or criminal guilt incurred as a result of the unlawful conduct he has engaged in prior to issuance of the order. Defendants offer no satisfactory answer to the observation of the Court of Appeal that as defendants construe section 790.09, its reference to civil and criminal liability becomes meaningless. The section provides that a cease-and-desist order to a person does not relieve or absolve such person from any administrative action against the license or certificate of such person, civil liability or criminal penalty under the laws of this State arising out of the methods, acts or practices found unfair or deceptive. (Italics added.) The Insurance Commissioner has no power to initiate a criminal proceeding against, or an action to impose civil liability on, a person who engages in unfair trade practices. The authority of the commissioner is limited to enjoining future unlawful conduct and suspending or revoking a license or certificate. ( Shernoff v. Superior Court (1975) 44 Cal. App.3d 406, 409 [118 Cal. Rptr. 680].) That part of section 790.09 which preserves civil and criminal liability would be meaningless if defendants' proposed construction of the section were accepted. Well-established canons of statutory construction preclude a construction which renders a part of a statute meaningless or inoperative. In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such a construction is, if possible, to be adopted as will give effect to all. (Code Civ. Proc., § 1858.) Pursuant to this mandate we must give significance to every part of a statute to achieve the legislative purpose. ( Schwab v. Rondel Homes, Inc. (1991) 53 Cal.3d 428, 435 [280 Cal. Rptr. 83, 808 P.2d 226]; J.R. Norton Co. v. Agricultural Labor Relations Bd. (1979) 26 Cal.3d 1, 36-37 [160 Cal. Rptr. 710, 603 P.2d 1306].) Not only is the construction defendants suggest inconsistent with the language of section 790.09, but a conclusion that the Legislature intended by section 790.09 to displace Cartwright Act, Unfair Practices Act, and UCA remedies would be contrary to consistent administrative construction of the act and available legislative history. It would also be contrary to the conclusion of courts of other states which have adopted the same or similar legislation in order to take advantage of the McCarran-Ferguson Act exemption from application of the federal law that existing rights and remedies are preserved by this provision. The Cartwright Act (Stats. 1941, ch. 526, § 1, p. 1834) and the Unfair Practices Act (Bus. & Prof. Code, § 17000 et seq., also added by Stats. 1941, ch. 526, § 1, p. 1834) predate the UIPA (Stats. 1959, ch. 1737, § 1, p. 4191). The Legislature was aware that almost all of the practices which the UIPA prohibits in section 790.03 and defines as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance were already proscribed under those acts. [7] When the UIPA was introduced as Assembly Bill No. 1530 in 1958, its acknowledged purpose was to preclude federal jurisdiction over the business of insurance. Section 790 states that purpose: The purpose of this article is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, Seventy-ninth Congress), by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined. Lower courts have repeatedly recognized that the purpose of the UIPA is to displace federal law, not existing state law in the field of antitrust and unfair competition. (See, e.g., Karlin v. Zalta, supra, 154 Cal. App.3d 953, 966; American Internat. Group, Inc. v. Superior Court (1991) 234 Cal. App.3d 749, 756-758 [285 Cal. Rptr. 765].) Moreover, as the Court of Appeal recognized, nothing in the history of the UIPA reflects legislative intent to bring about a pro tanto repeal of the Cartwright Act or the UCA. At the time the bill was passed the Legislative Analyst expressed the view that adoption of the UIPA made no change in existing law, stating: The bill makes no substantive change in existing law as the insurance commissioner has in the past regulated such matters under his general powers. (Ops. Legis. Analyst, Analysis of Assem. Bill No. 1530 (May 20, 1959) p. 1.) That this understanding of the UIPA was shared by the Legislature is confirmed by that body's enactment of the specific exemptions from antitrust legislation noted above, exemptions that would have been unnecessary had the UIPA effected a blanket exemption of the insurance industry from the rights and remedies available under the Cartwright Act, UCA and other legislation. [8] As the Court of Appeal noted, section 790.09 was patterned after a draft of the Model Unfair Insurance Practices Act proposed by the National Association of Insurance Commissioners (NAIC) (exhibit B to Rep. of Joint Com. on Federal Legislation, etc. (Jan. 24, 1947) § 8(d); Proceedings, 78th Ann. Sess., NAIC (1947)) p. 398), [9] and has been construed in other states which have adopted the same or substantially similar statute as preserving remedies already available at the time the UIPA was adopted in those states. (See Attorney General of Tex. v. Allstate Ins. Co. (Tex. App. 1985) 687 S.W.2d 803, 805; Application of Kusher (1981) 108 Misc.2d 329 [437 N.Y.S.2d 889, 890-891]; Fischer, etc. v. Forrest T. Jones & Co. (Mo. 1979) 586 S.W.2d 310, 313, 315; Dodd v. Commercial Union Ins. Co. (1977) 373 Mass. 72 [365 N.E.2d 802, 805]; Correa v. Pennsylvania Mfrs. Ass'n. Ins. Co. (D.Del. 1985) 618 F. Supp. 915, 926; Grand Ventures, Inc. v. Whaley (Del. Super. Ct. 1992) 622 A.2d 655, 664; Mead v. Burns (1986) 199 Conn. 651 [509 A.2d 11, 18]; Skinner v. Steele (Tenn. App. 1987) 730 S.W.2d 335, 337-338; Hardy v. Pennock Ins. Agency, Inc. (1987) 365 Pa. Super. 206 [529 A.2d 471, 479]; St. ex rel. Stratton v. Gurley Motor Co. (1987) 105 N.M. 803 [737 P.2d 1180, 1183]; Phillips v. Integon Corp. (1984) 70 N.C. App. 440 [319 S.E.2d 673, 675]; Grams v. Boss (1980) 97 Wis.2d 332 [294 N.W.2d 473, 480].) [10] By contrast, no court has construed a version of section 790.09 in the manner suggested by defendants as intended only to avoid a possible res judicata effect of merger of other administrative remedies into an action leading to a cease-and-desist order. (5) The presumption against finding a pro tanto repeal of a statute in the enactment of subsequent legislation on the subject is so strong that the court will do so only if the later statute revises the earlier in a manner that necessarily implies legislative intent to substitute the new statute for the older. ( Roberts v. City of Palmdale, supra, 5 Cal.4th 363, 379.) (1c) Neither the language of the UIPA nor its history suggests that the Legislature intended by its enactment to abolish the Cartwright Act and UCA remedies for conduct which the UIPA also proscribes.