Amwest Surety Ins. Co. v. Wilson

• Citation: 48 Cal.Rptr.2d 12,11 Cal.4th 1243,906 P.2d 1112
• Decision Date: 14 December 1995
• Docket Number: No. S037405,S037405
• Court: United States State Supreme Court (California)
• Parties: , 906 P.2d 1112, 95 Cal. Daily Op. Serv. 9590, 95 Daily Journal D.A.R. 16,625 AMWEST SURETY INSURANCE COMPANY, Plaintiff and Respondent, v. Pete WILSON, as Governor, etc., et al., Defendants and Respondents; Charles Quackenbush, as Commissioner, etc., Defendant and Appellant; Voter Revolt, Intervener and Appellant.

Page 12

48 Cal.Rptr.2d 12

11 Cal.4th 1243, 906 P.2d 1112, 95 Cal. Daily Op. Serv. 9590,

95 Daily Journal D.A.R. 16,625

AMWEST SURETY INSURANCE COMPANY, Plaintiff and Respondent, v. Pete WILSON, as Governor, etc., et al., Defendants and Respondents Charles Quackenbush, as Commissioner, etc., Defendant and Appellant Voter Revolt, Intervener and Appellant.

No. S037405.

Supreme Court of California.

Dec. 14, 1995.

Strumwasser & Woocher, Michael J. Strumwasser, Fredric D. Woocher and Susan L. Durbin, Santa Monica, for Defendant and Appellant.

Hall & Phillips, Los Angeles, John R. Phillips, Washington, DC, Carl H. Moor, Los Angeles, Leon Dayan, Phillips, Cohen & Goldstein, Washington, DC, Ann E. Carlson, Los Angeles, Linda B. Popejoy, New York City, Hall & Associates, Carlyle W. Hall, Jr., Edward P. Howard and Gus T. May, Los Angeles, for Intervener and Appellant.

Christopher L. Kelley, Los Angeles, Olson, Hagel, Fong, Leidigh, Waters & Fishburn, and George Waters, Sacramento, as Amici Curiae on behalf of Defendant and Appellant and Intervener and Appellant.

Larry A. Rothstein, Hufstedler, Kaus & Ettinger, Los Angeles, Hufstedler & Kaus, Morrison & Foerster, Otto M. Kaus, John Sobieski, Thelen, Marrin, Johnson & Bridges and Curtis A. Cole, Los Angeles, for Plaintiff and Respondent.

Barger & Wolen, Kent R. Keller, Robert W. Hogeboom, Steven H. Weinstein, John C. Holmes and Lawrence F. Krutchik, Los Angeles, as Amici Curiae on behalf of Plaintiff and Respondent.

Daniel E. Lungren, Attorney General, Edmond B. Mamer and Jack T. Kerry, Deputy Attorneys General, for Defendants and Respondents.

Michael L. Pinkerton, Sacramento, as Amicus Curiae on behalf of Defendants and Respondents.

Paul R. Geissler, Northridge, Craig A. Berrington, David F. Snyder, James L. Kimble, Washington, DC, Munger, Tolles & Olson, Allen M. Katz, Mark B. Helm, Gregg W. Kettles, Sidley & Austin, George Deukmejian, James M. Harris, Hill, Farrer & Burrill, Jack R. White and James R. Evans, Jr., Los Angeles, as Amici Curiae on behalf of Plaintiff and Respondent and Defendants and Respondents.

GEORGE, Justice.

In 1988, the voters approved Proposition 103, an initiative measure entitled the Insurance Rate Reduction and Reform Act. Among other provisions affecting certain types of insurance, Proposition 103 imposed a rate rollback and required that any subsequent rate increase, prior to its use, be approved by the Insurance Commissioner. Section 8(b) of Proposition 103 provides: "The provisions of this act shall not be amended by the Legislature except to further its purposes...." (Stats.1988, p. A-290.)

In 1990, the Legislature enacted Insurance Code section 1861.135, ¹ which exempts surety insurance from the rate rollback and rate approval provisions of Proposition 103. For the reasons that follow, we hold that section 1861.135 is invalid because it does not further the purposes of Proposition 103.

We also hold that the decision of the Court of Appeal in this case did not satisfy the requirement of article VI, section 14, of the California Constitution that decisions of the Supreme Court and the Courts of Appeal be in writing "with reasons stated," because the opinion announcing the judgment reflects the views of only the authoring justice. The only other justice who concurred in the judgment simply "concurred in the result," and did not state her reasons for doing so.

I

On November 8, 1988, the voters enacted the initiative measure designated Proposition 103 that, among other provisions, added article 10, entitled Reduction and Control of Insurance Rates, to chapter 9 of part 2, division 1, of the Insurance Code. (§ 1861.01 et seq.) The provisions of chapter 9 "apply to all insurance on risks or on operations in this state," with the exception of certain specified types of insurance. (§ 1851.) As discussed more fully below, surety insurance is not included among the exceptions specified in section 1851 and, therefore, is regulated by chapter 9. In adding article 10 to chapter 9, Proposition 103 provided to the same effect: "This article shall apply to all insurance on risks or on operations in this state, except those listed in Section 1851." (§ 1861.13.)

Section 1861.01, subdivision (a), of article 10 imposes a rollback of the rates (for all insurance regulated by chapter 9) to at least 20 percent less than the rate in effect one year prior to the enactment of Proposition 103. Subdivision (b) of section 1861.01 provides that, during the first year following the enactment of Proposition 103, these reduced rates could be increased only if the Insurance Commissioner found, after a hearing, that the insurer was "substantially threatened with insolvency." ² Subdivision (c) of section 1861.01 provides that, commencing one year after the enactment of Proposition 103, "insurance rates subject to this chapter must be approved by the commissioner prior to their use." ³

Section 1861.05, also enacted by Proposition 103, provides in subdivision (a): "No rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter." Subdivision (b) of section 1861.05 requires an insurer that desires to change a rate to file "a complete rate application with the commissioner." The remainder of section 1861.05 describes the information that a rate application must include and the procedures for ruling upon such applications. ⁴

Section 8(b) of Proposition 103, which is not codified, states: "The provisions of this act shall not be amended by the Legislature except to further its purposes by a statute passed in each house by roll call vote entered in the journal, two-thirds of the membership concurring, or by a statute that becomes effective only when approved by the electorate." (Stats.1988, p. A-290.)

On November 9, 1988, the day after Proposition 103 was enacted, Amwest Surety Insurance Company (Amwest) filed in superior court the present action against the Governor, the Attorney General, the Insurance Commissioner, and the State Board of Equalization, challenging the validity of Proposition 103 as applied to surety insurance ⁵ and seeking a writ of mandate or an injunction.

On May 4, 1989, in Calfarm Ins. Co. v. Deukmejian, supra, 48 Cal.3d 805, 815, 258 Cal.Rptr. 161, 771 P.2d 1247, we held unconstitutional section 1861.01, subdivision (b), which had precluded the commissioner from approving a rate increase before November 8, 1989, unless the insurer was substantially threatened with insolvency. We also held unconstitutional another section enacted by Proposition 103 that is not here at issue. Additionally, we held that the invalid sections were severable from the remainder of Proposition 103 and that, with those invalid sections severed, the remainder of Proposition 103 was facially valid. ⁶

On August 24, 1990, the Governor signed into law Assembly Bill No. 3798, 1989-1990 Regular Session, which passed by unanimous vote of both houses of the Legislature. That bill added section 1861.135 to article 10, exempting surety insurance from the rate rollback and rate approval requirements of sections 1861.01 and 1861.05, and providing instead that rates for surety insurance "may be used immediately upon filing with the commissioner." ⁷

In December, 1990, Voter Revolt, the organization that drafted Proposition 103 and campaigned for its passage, successfully sought to intervene in the present case in order to assert that newly enacted section 1861.135 was invalid because it did not further the purposes of Proposition 103 as required by section 8(b) of that initiative. The superior court subsequently ruled that section 1861.135 is valid. Voters Revolt and the Insurance Commissioner appealed.

The Court of Appeal was divided on this issue. The opinion announcing the judgment, authored by Justice Hinz, relied upon article II, section 10, subdivision (c), of the California Constitution, which provides that the Legislature may not amend or repeal an initiative statute without voter approval "unless the initiative statute permits amendment or repeal without their approval." Justice Hinz observed that section 8(b) of Proposition 103 permits legislative amendments that further the purposes of the initiative, but concluded section 1861.135 was invalid because it did not further the purposes of Proposition 103. Justice Kitching indicated she "concurred in the result." Justice Croskey dissented.

II

Article II, section 10, subdivision (c), of the California Constitution states: "The Legislature ... may amend or repeal an initiative statute by another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without their approval." Section 8(b) of Proposition 103 permits such amendments without voter approval, but only "to further [the initiative's] purposes."

The parties agree that "[u]nder article II, section 10, subdivision (c) [of the California Constitution], the voters have the power to decide whether or not the Legislature can amend or repeal initiative statutes. This power is absolute and includes the power to enable legislative amendment subject to conditions attached by the voters. (See Franchise Tax Bd. v. Cory (1978) 80 Cal.App.3d 772, 776-777 .)" (California Common Cause v. Fair Political Practices Com. (1990) 221 Cal.App.3d 647, 652, 269 Cal.Rptr. 873, italics in original; Huening v. Eu (1991) 231 Cal.App.3d 766, 779, 282 Cal.Rptr. 664.) As the parties acknowledge, it follows that the validity of section 1861.135 depends upon whether it furthers the purposes of Proposition 103. The parties disagree, however, as to whether section 1861.135 furthers the purposes of Proposition 103, and what standard of review we should employ in deciding this question.

Amwest, relying upon the rule that "a strong presumption of constitutionality supports the Legislature's acts" (California Housing Finance Agency v....