Court Opinion

ID: 9559583
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:31:52.83695+00
Date Added: 2024-06-11T09:10:38.440171
License: Public Domain

BROWN, J., Dissenting.
At oral argument, it became apparent there is no factual basis to support the allegations in the complaint that defendants “conspired” to refuse title insurance to plaintiffs’ tax-defaulted property. Counsel conceded plaintiffs presently have no evidence of an agreement. Establishing an “unlawful” agreement under the Cartwright Act is the heart of plaintiffs’ case, the central predicate on which their derivative claim under the unfair competition law (Bus. & Prof. Code, § 17200 et seq. (UCL)) rests. (Maj. opn., ante, at pp. 49-50.) Without a factual basis, it collapses. The majority’s decision to reverse the judgment of dismissal thus turns on a technical rule of pleading—that a demurrer admits all facts properly pleaded in a complaint—combined with official indulgence of plaintiffs’ desire to conduct a fishing expedition. I would put this sham lawsuit out of its misery. Because the allegations of the complaint are hopelessly clouded by counsel’s *61concession at oral argument, I would dismiss the petition for review in this case as improvidently granted.
Even without plaintiffs’ concession, I would still find the complaint insufficient to state a claim under the UCL and for interference with contract. The trial court sustained defendants’ demurrer without leave to amend. The Court of Appeal affirmed that judgment. The reason is intuitively obvious: “Nothing from nothing leaves nothing.”1 A lawsuit is a means of redressing a cognizable injury. Relying on recommendations of an advisory organization of title insurers, and their own evaluations of the risks presented by tax deeds, defendants do not underwrite tax titles. The organization’s advice is exempt from the antitrust provisions of the Cartwright Act (see Ins. Code, § 12414.29), and no law requires title companies to insure unreasonable risks against their business judgment. Despite this straightforward logic, the majority holds that a gossamer skein of suppositions—that defendants “conspired,” that a “conspiracy” is “unlawful,” that anything “unlawful” will support a UCL suit—is enough to permit this litigation to continue.
The Court of Appeal’s result was the right one; this case should not survive a demurrer. Orderly legal development is not advanced by placing this court’s imprimatur on yet another unfair competition claim of dubious pedigree.
“Buying Lawsuits” and Curative Statutes
Tax titles, long regarded as “buying a lawsuit,” have historically been uninsurable and practically unmarketable. (2 Bowman, Ogden’s Revised Cal. Real Property Law (1975) § 21.26, p. 1098 (Ogden’s).) In 1938, in common with other states emerging from the Great Depression, the Legislature strengthened tax titles by enacting limitations statutes requiring attacks based on “irregularit[ies] of the tax collector’s deed” to be brought within one year. (Rev. & Tax. Code, §§ 3725, 3726.) Intended to armor tax titles against defeasance in a period of wholesale tax delinquencies and general economic insecurity, these measures were good for the counties because they enhanced marketability. Without them, local governments might face a glut of tax-defaulted property and falling revenues. (Ogden’s, supra, § 21.26, at p. 1098 [“in 1937, in Los Angeles County, over 100,000 parcels” removed from the tax rolls]; see also Craland, Inc. v. State of California (1989) 214 Cal.App.3d 1400, 1404 [263 Cal.Rptr. 255] [“The tax sale furthers the public interest by collecting taxes owed . . . and also returning the property to the tax rolls . . . .”].)
*62Despite plaintiffs’ claim to the contrary, shortened limitations statutes do not mean tax titles are risk free. ( Van Petten v. County of San Diego (1995) 38 Cal.App.4th 43, 50 [44 Cal.Rptr.2d 816] [“a purchaser of property at a tax sale takes the risk of any defect”].) Plaintiffs overlook that property owners involuntarily “sold out” by tax foreclosures are an inherently sympathetic lot, just as those who buy tax titles are speculators profiting off the misfortune of others. (See, e.g., Note, The Current Status of Tax Titles: Remedial Legislation v. Due Process (1948) 62 Harv. L.Rev. 93, 100, fn. 40 [“[T]ax lien purchasers are traditionally speculators who do not enlist the sympathy of the court.”].) Forced to choose, courts may look with a jaundiced eye on such a newly minted title, especially given the often gross disparity between land, value and tax redemption price. (See id. at p. 100 [“[T]he notorious insecurity of tax titles keeps the purchase price at the level of the statutory minimum—taxes, interest, penalties, and costs of the sale.”].)
This minefield of contingencies would naturally weigh against the actuarial calculations of any rational insurer, the “curative” provisions of Revenue and Taxation Code sections 3725 and 3726 notwithstanding. It is not surprising, then, that the Legislature has not required title companies to insure tax titles. Yet it is just that extraordinary proposition plaintiffs assert is the law. The majority does not endorse plaintiffs explicitly, it does so impliedly by holding they may seek to prove summary allegations that defendants “conspired” to refuse them title insurance. (See maj. opn., ante, at pp. 49-50.) Such allegations are easy to plead. Holding these legally sufficient to survive a demurrer ensures costly, extended litigation and furnishes leverage for settlement, especially where a conclusory “conspiracy” is the only predicate for a UCL claim. Unlike the majority, I would require more.
Judicial Abstention, the UCL and Primary Jurisdiction
It is a truism that UCL litigation over industry-wide economic practices hampers rather than advances effective regulation. Several recent private UCL suits seeking to short-circuit complex regulatory schemes have been dismissed on that common ground. As one Court of Appeal wrote in dismissing a suit seeking “court-created regulation of [insurance] brokers” (Crusader Ins. Co. v. Scottsdale Ins. Co. (1997) 54 Cal.App.4th 121, 138 [62 Cal.Rptr.2d 620]), “[i]nstitutional systems are . . .in place to deal with [the issue]. There is no need or justification for the courts to interfere . . . .” (Ibid.) Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th 554 [53 Cal.Rptr.2d 878] is on all fours. Plaintiff sought a judgment that a refusal to include earthquake damage in homeowners insurance policies *63violated the UCL; the Court of Appeal dismissed: “Assuming . . . [plaintiff] can state a cause of action . . . that by itself does not permit unwarranted judicial intervention in an area of complex economic policy.” (Id. at pp. 564-565, fn. omitted; see also Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1301-1302 [22 Cal.Rptr.2d 20] [UCL suit challenging health policy reimbursement provision; “courts cannot assume general regulatory powers over health maintenance organizations through [the UCL]”]; California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th 205, 218 [27 Cal.Rptr.2d 396] [UCL challenge to bank assessments on “NSF” checks; “[judicial review of one service fee charged by one bank is an entirely inappropriate method of overseeing bank service fees”].)
Because these cases implicated complex regulatory issues, their resolution in a private UCL suit was “inappropriate.” Either the Legislature had imposed its own regulatory solution, or UCL litigation was the wrong medium. And because regulatory proceedings were more appropriate, these courts abstained, refusing to exercise jurisdiction under the UCL. The reasoning of these cases applies here, where plaintiffs, by leveraging the UCL, want to require the Superior Court of El Dorado County to assume the regulatory jurisdiction of the Department of Insurance. That the insurance industry is highly regulated suggests a related doctrine may apply—“primary jurisdiction.” We invoked that doctrine in Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377 [6 Cal.Rptr.2d 487, 826 P.2d 730] (Farmers), a case presenting the same mix of economic, policy and regulatory issues. The Attorney General sued to require auto insurers to offer the “Good Driver Discount” adopted as part of Proposition 103 (Ins. Code, §§ 1861.02, 1861.05; enacted by the voters in Nov. 1988). Relying on provisions of the Insurance Code, we concluded that “considerations of judicial economy, and concerns for uniformity in application of the complex insurance regulations,” supported initial resort to the Insurance Commissioner. (Farmers, supra, 2 Cal.4th at p. 396.)
It is not simply that a single superior court judge hearing a single UCL case is a poor choice to resolve a myriad of complicated fact and policy issues tied to the economics, risks, cost and availability of title insurance. It is that given the scope of its administrative authority and depth of regulatory experience, the Department of Insurance is likely to prove better at the job. In this case, the practical meaning of primary jurisdiction is the virtual plenary jurisdiction of the department over insurance and insurers and their business practices. It can employ resources to develop an accurate picture of the economics of title insurance, its costs, availability, and industry practices; it can determine the forces behind plaintiffs’ complaint; if warranted, it can prescribe an industry-wide remedy. It was to support the use of broad *64administrative powers in highly regulated businesses that primary jurisdiction was invented. Just as we took advantage of the commissioner’s resources in Farmers, supra, 2 Cal.4th 377, we ought to do so here. Whether proceedings before the department increase the availability of title insurance for tax deeds is not the point. Primary jurisdiction does not oust the courts; it enables them to bring the investigative and policy resources of experts to bear on complex regulatory issues.
Interference With Contract
In Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376 [45 Cal.Rptr.2d 436, 902 P.2d 740] (Della Penna), we held that unqualified claims of interference with economic “expectations” were at odds with fundamental notions of commercial competition. Unless checked, they threatened perverse results, rewarding the inefficient and penalizing the competitive. (Id. at p. 384.) Such suits could not be maintained, we ruled, unless plaintiff proved conduct “wrongful by some legal measure other than . . . interference itself.” (Id. at p. 393, italics added.) Proof of an independent wrong was required. (Ibid.) The majority would distinguish the claim in Della Penna from plaintiffs’ allegations of contractual interference. But that distinction is not significant here. The allegation of tortious interference with contract is not that defendants induced others to breach contracts with plaintiffs. It is the claim they interfered with the performance of those contracts, not by directly and purposefully hindering performance, but as an indirect effect of the evenhanded, industry-wide, recommended practice of not insuring the abnormal risks tax titles present.
Such contract claims, like economic expectations claims, also require more than a bald allegation of “interference,” especially when they allege no more than the pursuit of legitimate commercial interests. That additional requirement is the same “interference plus” independently improper conduct we imposed in Della Penna, supra, 11 Cal.4th 376. According to section 766 of the Restatement Second of Torts, “One who intentionally and improperly interferes with the performance of a contract . . . between another and a third person by inducing or otherwise causing the third person not to perform ... is subject to- liability . . . .” (Id. at p. 7, italics added.) That is the majority rule. It means what it says: “The keystone of the statement is the adverb ‘improperly’ . . . .” (Guard-Life Corp. v. S. Parker Hardware Mfg. (1980) 50 N.Y.2d 183 [428 N.Y.S.2d 628, 406 N.E.2d 445, 448].) To state an interference with contract claim, plaintiffs must prove more than a breach; they must prove a breach caused by wrongful or improper conduct. (See, e.g., Top Serv. Body Shop, Inc. v. Allstate Ins. Co. (1978) 283 Or. 201 [582 P.2d 1365, 1372] [acts by insurer “wholly consistent with [its] pursuit *65of its own business purposes” did not support inference of “improper purpose to injure [plaintiff]”]; Wagenseller v. Scottsdale Memorial Hosp. (1985) 147 Ariz. 370 [710 P.2d 1025, 1043] [“We find nothing inherently wrongful in ‘interference’ itself. . . . [L]iability must be based on more than . . . interference alone.”]; Alvord and Swift v. Stewart M. Muller Const. Co. (1978) 46 N.Y.2d 276 [413 N.Y.S.2d 309, 310, 385 N.E.2d 1238, 1239] [interference with performance not actionable where “incidental to another legitimate business purpose”].)
We said as much in Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118 [270 Cal.Rptr. 1, 791 P.2d 587], Dismissing a contract interference claim on the ground that defendant had done no more than counsel a client to seek a judicial determination whether it could terminate a contract, we called plaintiff’s suit “to make it a tort to induce potentially meritorious litigation,” “repugnant” to the philosophy of unhindered access to the courts. (Id. at p. 1137.) Because access to the courts was not wrongful or improper, it was not tortious. Despite the majority’s assertion that “[wjrongfulness independent of the inducement to breach ... is not an element of the tort of intentional interference” with contract (maj. opn., ante, at p. 55), the law is to the contrary. A refusal to insure tax titles founded on economically rational, commercially prudent considerations is neither wrongful nor improper. And it is not a tort.
I dissent.
On September 23, 1998, the opinion was modified to read as printed above.

 From the tune, Nothing From Nothing, by Billy Preston.