Court Opinion

ID: 9724135
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:45:53.746+00
Date Added: 2024-06-11T18:24:56.614525
License: Public Domain

DANIELSON, Acting P. J.
I respectfully dissent from the foregoing opinion and decision.
I concur with the majority opinion in all respects except (1) the conclusion that there was no merit in defendants’ contention that the trial court erred in granting judgment against them on the cause of action in their cross-complaint alleging violations by Imperial of its statutory obligations under Insurance Code section 790.03, subdivision (h), and (2) the majority’s holding that rescission of the policy of insurance bars any claim by the insured under Insurance Code section 790.03, subdivision (h)(hereafter subdivision (h)).
The majority opinion errs in that it is based upon a misunderstanding of the nature and purpose of subdivision (h).1
*187The majority opinion treats the unfair practices proscribed by subdivision (h) as being dependent on the continued existence of the insurance contract. It holds that because, on rescission of that contract, all rights of the insured under the contract are extinguished, all rights of the insured to prosecute a claim against the insurer for violation of section 790.03, subdivision (h) are also extinguished. That is not the nature or the purpose of the statute.
The unfair practices defined in subdivision (h) are torts. They are not derivative torts, rooted in the insurance contract; they are separate, independent, statutory torts. They derive their life from the statute itself—not from the common law, and not from the insurance contract sold and issued by the insurer. By their very terms those statutory torts have nothing to do with the contract of insurance itself. They have to do, only, with prohibited unfair settlement practices by insurers directed against both their insureds and third person claimants. Those unfair practices are proscriptions imposed upon insurers by our Legislature as part of the public policy of the State of California. Stated another way, the statute imposes upon insurers a duty not to perform any of the described “unfair claims settlement practices.”
The Legislature has the power and the right to establish the torts set forth in Insurance Code section 790.03.
“It is well settled that the Legislature possesses a broad authority both to establish and to abolish tort causes of action. As former Chief Justice Gibson put it over 30 years ago, ‘Except as the Constitution otherwise provides, the Legislature has complete power to determine the rights of individuals. [Citation.] It may create new rights or provide that rights which have previously existed shall no longer arise . . . .’ (Modern Barber Col. v. Cal. Emp. Stab. Com. (1948) 31 Cal.2d 720, 726 . . . ; accord, Werner v. Southern Cal. etc. Newspapers [(1950)] 35 Cal.2d 121, 125; Ferreira v. Barham (1964) 230 Cal.App.2d 128, 130 . . . ; Lowman v. Stafford (1964) 226 Cal.App.2d 31, 38-39 . . . .)” (Cory v. Shierloh (1981) 29 Cal.3d 430, 439 [174 Cal.Rptr. 500, 629 P.2d 8]; see also, Werner v. Southern Cal. etc. Newspapers, supra, 35 Cal.2d 121, 129-130 [216 P.2d 825, 13 A.L.R.2d 252].)
“ ‘[T]he Constitution does not forbid the creation of new rights, or the abolition of old ones recognized by the common law, to attain a permissible legislative object.’ (Silver v. Silver, 280 U.S. 117, 122 . . . ; Langdon v. Sayre, 74 Cal.App.2d 41 . . . .)” (Werner v. Southern Cal. etc. Newspapers, supra, 35 Cal.2d 121, 125-126.)
The State of California has a compelling interest in protecting and bettering the rights and remedies of its citizens who suffer injuries and losses as *188the results of the tortious acts of others; that is a permissible legislative object.
It is common knowledge that, today, the insurance business is a part of the fabric of the lives of everyone. It is also common knowledge that, today, persons who suffer losses which are covered by insurance must often wait five years or more before receiving compensation for losses suffered; and that result is only after years of agonizing, burdensome, expensive and long-drawn-out litigation which has become an oppressive burden on the injured persons, the taxpayers and the judicial system. Legislation, designed to correct that process, which is reasonable in its impact, is clearly in the public interest. It is a proper subject to be addressed by the policy making branch of our government. The statutory bad faith tort is a reasonable limitation placed upon the settlement practices of insurers by the Legislature.
In the case at bench the trial court granted summary judgment on both the complaint and defendants’ cross-complaint. As the majority opinion points out, at page 176, ante, “[ajlthough the issues raised by the cross-complaint were not the subject of competing declarations or argument before the trial court, the judge, in granting Imperial a judgment, apparently assumed that if Imperial was entitled to a rescission ab initio, then all of the claims in the cross-complaint must fail as a matter of law.” That decision was error. As has been pointed out above the alleged violations of subdivision (h) are separate and independent statutory torts; they do not depend upon the continued existence of the insurance contract, which has been rescinded; in the case at bench they depend only upon the acts and practices of the insurer directed at the insureds during the time before the insurance contract was rescinded.
I concur with the greater part of the decision in the majority opinion but I would also vacate the order granting the motion for summary judgment as to the cause of action alleging violations of subdivision (h).
A petition for a rehearing was denied February 23, 1988, and the opinion was modified to read as printed above. Danielson, J., was of the opinion that the petition should be granted. Appellant’s petition for review by the Supreme Court was denied April 21, 1988.

The relevant portions of Insurance Code section 790.03 are set forth in footnote 11 of the majority opinion, ante, at page 183, which I shall not repeat at this point.