Court Opinion

ID: 9746135
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:01:12.479081+00
Date Added: 2024-06-11T07:25:09.519029
License: Public Domain

WOODS, J.,
Dissenting. — The majority determination that the trial court properly sustained the demurrer to David C. Powell’s CLRA (Consumers Legal Remedies Act; Civ. Code, § 1750 et seq.) claim, in light of California Supreme Court precedent Civil Service Employees Ins. Co. v. Superior Court (1978) 22 Cal.3d 362, 376 [149 Cal.Rptr. 360, 584 P.2d 497], is correct in my view. I concur in the analysis.
Nonetheless, I respectfully disagree with the majority’s conclusion that the trial court erred in sustaining the demurrer to the other causes of action. As I shall explain, in my view the trial court correctly concluded Powell’s claims *926were barred by the statutes of limitation because the disclaimers in the illustration and the policy language were sufficient, as a matter of law, to give Powell actual, if not at least inquiry, notice that the cash values were not “guaranteed” as of August 1993 and that the complaint failed to establish the element of justifiable reliance.
Preliminarily, however, I note my agreement with the opinion’s analysis on a number of other points. First, I agree with the description of when the various statutes of limitation begin to run and of the delayed discovery rule’s application to the claims. Second, I also concur that in general the question of when a plaintiff reasonably should have discovered the facts for the purposes of accrual of an action or the discovery rule is a question of fact that may be resolved as a matter of law when the undisputed evidence can support only one reasonable conclusion. Third, the majority is correct in stating that sufficiency of a disclaimer in a fraud claim must be assessed in light of the plaintiff’s knowledge and experience. Where my view departs from that expressed in the majority opinion, however, is in the application of these principles. Because the material facts are undisputed and, as I shall explain, can support but one reasonable conclusion in this case, the application of the statute of limitations can be decided as a matter of law on a demurrer, and was decided properly by the trial court.
A. Language in the Illustration and Policy Triggered the Statutes of Limitation.
The determination of Powell’s reasonableness in relying on Guardian Life’s policy illustration and the agent’s alleged promise that out-of-pocket premiums would not be required after the 11th year of the policy turns upon the disclaimers contained in the policy and the illustration. More specifically, it depends on whether those disclaimers were legally adequate, that is, whether the disclaimers were sufficiently conspicuous and whether they were clear. In my view there is no question that the disclaimers were obvious and unambiguous.
First as to the issue of placement, the disclaimers must be viewed in context. The first page of the policy advised in bold type: “Read this policy carefully.” (Italics added.) The second page of the three-page illustration clearly stated “please see attached sheets with important footnotes.” (Italics added.) This would have led the reader to the third page of the illustration which stated, beginning at the 12th line of text, “Figures depending on dividends are neither estimated nor guaranteed, but are based on the 1993 dividend scale. [¶] Actual future dividends may be higher or lower than those illustrated depending on the company’s actual future experience. [¶] . . . [¶] The number of years of required cash outlays depends upon age at issue, *927policy class, face amount, and continuation of Guardian’s current dividend scale, and assumes no policy loans. . . . This is not a paid-up policy; premiums are due and payable in all policy years.” (Italics added.) These disclaimers are formatted in capitalized letters in what appears to be standard 12-point Courier font.1 While these disclaimers could have been printed in a larger size font, the fact that they were not does not change my view of their manifest sufficiency, especially in view of the fact that the entire illustration is only three pages and Powell was instructed both by the policy and in the illustration to read the documents with care. A reasonable person would have followed these instructions, and having done so would have seen these disclaimers. Thus, the disclaimers were conspicuous enough to apprise a reasonable person of the terms.
Second, the language of the disclaimers is unambiguous. The disclaimers are written in plain English; they do not use technical financial or legal language. They do not contain terms of art unique to insurance policies. Read in context with the term “vanishing premium” on the first page of the illustration, a reasonable person would understand that any representation that all out-of-pocket premiums would “vanish” after 11 years was not unconditional or guaranteed. At a minimum this language would have given a reasonable person cause to at least suspect that the alleged representations concerning vanishing obligations to pay premiums out of pocket after the 11th policy year might be wrong. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807 [27 Cal.Rptr.3d 661, 110 P.3d 914] [A plaintiff has reason to discover a cause of action when he or she “ ‘has reason at least to suspect a factual basis for its elements.’ ” Rather than examining whether the plaintiffs suspect facts supporting each specific legal element of a particular cause of action, we look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them].) Accordingly, the disclaimer in the illustration was sufficient to give Powell reason to inquire as to whether out-of-pocket premiums might be required past the originally projected vanishing date. (See, e.g., In re Jackson Nat. Life Ins. Co. Premium Litigat. (W.D.Mich. 2000) 107 F.Supp.2d 841, 852-853 [applying California law, federal district court concluded that language in insurance policy which indicated that the exercise of the vanishing option was conditioned on a sufficiency of cash value accumulation, rather than guaranteed, was sufficient to put plaintiff on inquiry notice to investigate whether the nature of his policy and his future premium obligations had been misrepresented at point of sale].)
*928In addition, an examination of the conspicuous and unambiguous language of the policy also supports my conclusion. The first page of the policy states that “premiums are payable during the insured’s lifetime” and that dividends are payable “if earned.” (Italics added.) The conditional “if’ language is significant here. Powell alleged that he was led to believe he would not have to pay out-of-pocket premiums after the 11th policy year because those future premiums would be paid out of the dividends earned on the policy. This alleged representation suggests that dividends were not conditioned on anything — that it was not a question of “if’ dividends would be earned, but only a matter of when they would be earned in a sufficient amount to pay the premiums. However, this conditional language in the policy implies that earnings were not guaranteed and this implication is at odds with what Powell claims he was told about the policy and at odds with his interpretation of the first page of the policy illustration. In my view, this language on the first page of the policy would have apprised a reasonable person that the out-of-pocket obligation to pay premiums might not vanish and at the very least would raise a question as to the accuracy of the alleged representations and illustration that suggested otherwise.
Finally, not to be overlooked in this analysis is the fact appellant David C. Powell is a college-educated professional and thus, presumably not an unsophisticated person. His application discloses that he is a dentist engaged in his own practice. Given his background and apparent intelligence, it would have been manifestly unreasonable for him not to read the policy and the entire illustration and having done so, he would have been alerted to the disclaimers.
B. As a Matter of Law, Powell Cannot Show Justifiable Reliance.
Notwithstanding my conclusion that the statutes of limitation barred Powell’s claims, Powell’s causes of action also fail for a separate and independent reason, namely, that as a matter of law, Powell cannot show justifiable reliance.
To show injury caused by a defendant’s misrepresentation, common law principles require that a plaintiff establish the element of reliance. (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1088, 1092 [23 Cal.Rptr.2d 101, 858 P.2d 568].) Reliance exists when “ ‘the representation has played a substantial part, and so has been a substantial factor, in influencing [the plaintiff’s] decision.’ ” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 977 [64 Cal.Rptr.2d 843, 938 P.2d 903].) Reliance also incorporates the concept of a material misrepresentation that underlies actionable fraud; i.e., “ ‘ “A misrepresentation of fact is material if it induced the plaintiff to alter his position to his detriment. [Citation.] Stated in terms of reliance, materiality means that without the misrepresentation, the plaintiff would not have *929acted as he did.” ’ ” (Caro v. Procter & Gamble Co. (1993) 18 Cal.App.4th 644, 668 [22 Cal.Rptr.2d 419].)
It must appear, however, not only that the plaintiff acted in reliance on the misrepresentation but also the plaintiff was justified in doing so. (Blankenheim v. E. F. Hutton & Co. (1990) 217 Cal.App.3d 1463, 1474 [266 Cal.Rptr. 593]; Hadland v. NN Investors Life Ins. Co. (1994) 24 Cal.App.4th 1578, 1586 [30 Cal.Rptr.2d 88] [fraud requires proof of false representation and plaintiff’s reasonable reliance].) Moreover, under California law, whether reliance was reasonable is a question of fact for the jury, and may be decided as a matter of law only if the facts permit reasonable minds to come to just one conclusion. (Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1666 [26 Cal.Rptr.3d 638].)
Generally, the reliance, causation, and injury components of a common law misrepresentation claim have been implicitly incorporated into the statutes affording remedies for misrepresentations to consumers. Here, as explained elsewhere, the conspicuous and express terms of the disclaimers in the illustration and the language of the policy attached to the complaint, which form the basis for Powell’s complaint, clearly convey that the “[figures depending on dividends are neither estimated nor guaranteed,” and depend on the “company’s actual future experience.” Thus, these express terms defeat Powell’s claim that his reliance on the alleged misrepresentations by Guardian Life and the agent was justified. No reasonable consumer could have, being aware of this language in the policy and illustration, justifiably relied on any purported representations or promises that Powell’s policy would be guaranteed to be paid for life after the 11th year of policy payments.
I also conclude, based on the clear language of the policy and the illustration, that Powell’s UCL (unfair competition law) claim would fail as a matter of law because the conduct alleged would not likely deceive consumers. (Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1288-1289 [119 Cal.Rptr.2d 190] [concluding a claim under the UCL (nonclass action) does not require a showing of individual reliance or that the plaintiff was deceived, nonetheless recognizing that a UCL claim requires a showing that a defendant’s conduct was likely to deceive consumers].)
*930In view of all of the foregoing, I conclude the court did not err in sustaining the demurrer without granting leave to amend, and accordingly would affirm the judgment.
A petition for a rehearing was denied March 19, 2009, and the petition of respondent John A. Davidson for review by the Supreme Court was denied May 20, 2009, S171912.
George, C. J., did not participate therein.

 The footnote on page 3 of the illustration contains a number of other lines of text in addition to the disclaimers at issue here. Nonetheless, all of the clauses in the footnotes should have drawn the attention of a reasonable person, as those provisions include a number of conditions and limitations placed on the policy.