Opinion ID: 2205488
Heading Depth: 2
Heading Rank: 1

Heading: the insurance code grants a private right of action

Text: ¶ 13 The Purchasers have brought their claims at issue in this appeal under section 31A-15-105(2) of the Utah Code. These claims survive only if section 31A-15-105(2) grants a private right of action to the Purchasers as policyholders. ¶ 14 The primary purpose of interpreting a statute `is to give effect to the legislature's intent.' LPI Servs. v. McGee, 2009 UT 41, ¶ 11, 215 P.3d 135 (quoting Savage v. Utah Youth Vill., 2004 UT 102, ¶ 18, 104 P.3d 1242). The best evidence of that intent is found in the plain language of the statute. Davis v. Provo City Corp., 2008 UT 59, ¶ 13, 193 P.3d 86. To determine the meaning of the plain language, we examine the statute `in harmony with other statutes in the same chapter and related chapters.' LPI Servs., 2009 UT 41, ¶ 11, 215 P.3d 135 (quoting Miller v. Weaver, 2003 UT 12, ¶ 17, 66 P.3d 592); see also R & R Indus. Park, L.L.C. v. Utah Prop. & Cas. Ins. Guar. Ass'n, 2008 UT 80, ¶ 23, 199 P.3d 917 (If the plain language is unambiguous then we need not look beyond it and no other interpretive tools are needed in analyzing the statute. (citation omitted)). ¶ 15 Section 31A-15-105(2) provides: An insurance policy entered into in violation of this chapter is voidable by the policyholder who entered into the transaction without knowing it was illegal. The policyholder may avoid the contract by notice to the insurer ... and may recover any consideration paid under the contract. (Supp. 2010) [3] (emphases added). This text plainly shows that the legislature intended to render a policy entered into in violation of Chapter 15 voidable by the policyholder. Voidable means the contract is capable of being affirmed or rejected at the option of one of the parties. Black's Law Dictionary 1709 (9th ed. 2009). Section 31A-15-105(2) allows the policyholder to affirm or reject the contract if the insurance contract was entered into in violation of [Chapter 15]. Thus, if policyholders find that they have entered into a contract with an unauthorized insurer, they may, by notice to the insurer, void the contract and recover any consideration paid under the contract. Utah Code Ann. § 31A-15-105(2). Having been given a right to recover the consideration paid, policyholders may enforce this right by bringing an action against the insurer in court. Thus, section 31A-15-105(2) vests in the policyholder a private right of action. ¶ 16 The foregoing conclusion is strengthened when we consider the purposes of Chapter 15 as a whole. One of the purposes of Chapter 15 is to subject unauthorized insurers and other persons doing an insurance business in Utah to the jurisdiction of the Utah commissioner and courts.  Id. § 31A-15-101(2) (2008) (emphasis added). This language makes it clear that the right of a policyholder to void a policy under section 31A-15-105(2) and to recover the consideration paid under the contract may be protected by the courts. Thus, both the plain language of section 31A-15-105(2) and the purpose underlying Chapter 15 support our holding that a policyholder has a private right of action that may be enforced in court. ¶ 17 The Car Dealers argue that this reading of section 31A-15-101(2) is not in harmony with section 31A-2-201 of the Utah Code, which states: The commissioner shall administer and enforce this title.... The commissioner shall inquire into violations of this title ... to determine: (a) whether or not any person has violated any provision of this title; or (b) to secure information useful in the lawful administration of this title. Id. § 31A-2-201(1), (6) (Supp. 2010). The Car Dealers interpret this section as giving the Insurance Commissioner exclusive power to enforce violations under Title 31A. They argue that the courts may only protect the rights of the policyholder after the Commissioner has determined that a violation has occurred. We disagree. ¶ 18 The language in section 31A-2-201 does not grant the Insurance Commissioner the exclusive right to enforce Chapter 15. While the section does vest the Insurance Commissioner with the right to enforce the code, it does not say no one else may do so. Indeed, section 31A-15-101(2) plainly extends jurisdiction over persons doing insurance business not only to the Insurance Commissioner, but also to the courts. Thus, a policyholder need not wait for action by the Insurance Commissioner before commencing litigation against an insurer under Title 31A. Instead, the policyholder may give notice to the insurer and file a lawsuit to recover any consideration paid under the policy as permitted by section 31A-15-105(2). ¶ 19 The Car Dealers cite the legislative history of section 31A-15-101(2) in an attempt to convince us that the purpose of Chapter 15 is contrary to what its plain language suggests. However, this section is unambiguous. There can only be one meaning applied to the phrase, the jurisdiction of the Utah commissioner and courts.  Id. § 31A-15-101(2) (emphasis added). Because section 31A-15-101(2) contains no ambiguity in granting jurisdiction to the courts, we need not look beyond the language of the statute. ¶ 20 Furthermore, our interpretation is supported by Surety Underwriters v. E & C Trucking, Inc., 2000 UT 71, 10 P.3d 338. In that case, the plaintiff brought suit against the defendant seeking to enforce an insurance contract. We found that the plaintiff, by entering into the contract when it was not authorized to do so, had violated Chapter 15. Id. ¶ 40. We applied section 31A-15-105(1) to render the contract unenforceable against the defendant. [4] Id. ¶ 41. Thus, we have previously used section 31A-15-105 as a basis for determining whether an insurer has violated Chapter 15. ¶ 21 Finally, the Car Dealers argue that allowing a party to circumvent the authority of the Utah Insurance Department by asserting regulatory claims in court would defeat the entire regulatory nature of the Insurance Code. We disagree. At most, section 31A-15-105(2) allows a party to void a contract entered into with an unauthorized insurer and obtain any consideration paid for the contract. Only the policyholder is entitled to any remedy, and it does not allow for a private cause of action for any other violation of the Insurance Code. The Car Dealers argue that, as a matter of policy, the Insurance Department possesses specialized skills and knowledge about whether an insurer is unauthorized to do business in Utah. However, we find that a district court is also capable of making that determination. ¶ 22 Thus, the plain language of section 31A-15-105(2) expressly grants a private right of action to the policyholder. We affirm the district court's holding.