Ellena v. Dep't of Ins.

• Decision Date: 01 October 2014
• Docket Number: A137268
• Court: California Court of Appeals Court of Appeals
• Parties: Cassaundra ELLENA, Plaintiff and Appellant, v. DEPARTMENT OF INSURANCE et al., Defendants and Respondents.

230 Cal.App.4th 198

178 Cal.Rptr.3d 435

Cassaundra ELLENA, Plaintiff and Appellant,

v.DEPARTMENT OF INSURANCE et al., Defendants and Respondents.

A137268

Court of Appeal, First District, Division 2, California.

Filed October 1, 2014

Reversed and remanded with directions.

See 2 Witkin, Summary of Cal. Law (10th ed. 2005) Insurance, § 5 et seq.

San Francisco City and County Superior Court, Hon. Harold Kahn, (San Francisco County Super. Ct. No. CGC–11–516008)

Law Office of Bennett M. Cohen, Bennett M. Cohen, Attorney for Appellant.

Kamala D. Harris, Attorney General of California, Paul D. Gifford, Senior Assistant Attorney General, Joyce E. Hee, Supervising Deputy Attorney General, Anne Michelle Burr, Deputy Attorney General, Attorneys for Respondents.

Kline, P.J.

Cassaundra Ellena appeals from a judgment of dismissal of her mandamus claim against the Department of Insurance and the Commissioner of the Department of Insurance (the commissioner; collectively, the DOI). Ellena contends, among other things, that the trial court erred when it found that she did not sufficiently allege in her pleading that the DOI violated a specific mandatory duty. We conclude that Ellena stated a viable mandamus claim because, as alleged, the commissioner violated the mandatory duty under Insurance Code sections 12921.5, subdivision (a), 12926, and 10291.5, subdivision (b),¹ to review a new group disability insurance policy form for compliance with the law prior to approving the policy for distribution in the state. Accordingly, we reverse the judgment dismissing the DOI.

Two years after approving the policy for distribution in California, the DOI, according to Ellena's pleading, defined “ ‘total disability’ ” in an agreement negotiated with another insurance company, known as the “ ‘California Settlement Agreement,’ ” as “a disability that renders one unable to perform with reasonable continuity the substantial and material acts necessary to pursue his or her usual occupation in the usual and customary way....” (Bold in original.) Ellena asserted that this definition in the California Settlement Agreement reflected settled California law and this settled law was known to the DOI when it approved the policy. The second amended complaint stated that the “ ‘Definition of Disability’ form [in the policy] that was ‘approved’ by the DOI Defendants ha[d] the effect of making it substantially easier than is permissible under settled California law for the insurer to deny benefits.” The DOI's approval of the “ ‘Definition of Disability’ provision” was, according to the second amended complaint, “a substantial factor in causing the denial of [Ellena's] claim for benefits.”

Ellena alleged that the DOI “never actually exercised” its “discretion or performed” its “mandatory duties under” the Insurance Code to determine whether the policy complied with California law or qualified for approval under the Insurance Code. Additionally, she asserted, “Assuming that the DOI Defendants actually reviewed the ‘Definition of Disability’ form under the California Insurance Code, ..., the DOI Defendants abused their discretion in approving the [p]olicy ...; the DOI Defendants' aforesaid abuses of discretion were palpably unreasonable, arbitrary and capricious.”

Ellena sought a writ of mandate to force the DOI to revoke and/or withdraw approval of the “Definition of Disability” form in the policy or to compel the DOI to exercise its discretion to approve or revoke the “Definition of Disability” form in the policy.

On June 28, 2012, the DOI again demurred to the second amended complaint. The trial court sustained the DOI's demurrer without leave to amend. The court ruled that Ellena had not sufficiently alleged a violation of a specific mandatory duty and that a writ of mandate could not be based on general enforcement provisions or statutes involving the DOI's exercise of discretion. On October 11, 2012, the court dismissed with prejudice the DOI from the lawsuit.

Ellena filed a timely notice of appeal. On September 16, 2013, the DOI filed in this court a motion to augment the record to include exhibits attached to the second amended complaint and a request for judicial notice of, among other things, two superior court orders in other cases. We granted the unopposed motion to augment and we took the request for judicial notice under submission, stating that we would rule on this request when deciding the merits of the appeal. We hereby grant the DOI's request for judicial notice. On October 16, 2013, Ellena filed an unopposed request for judicial notice of superior court orders in other cases. We granted this unopposed request on November 6, 2013.

DISCUSSION

I. Standard of Review

“ ‘A demurrer tests the legal sufficiency of the complaint, and the granting of leave to amend involves the trial court's discretion. Therefore, an appellate court employs two separate standards of review on appeal. [Citations.] First, the complaint is reviewed de novo to determine whether it contains sufficient facts to state a cause of action. [Citation.] In doing so, we accept as true the properly pleaded material factual allegations of the complaint, together with facts that may be properly judicially noticed. Reversible error exits only if facts were alleged showing entitlement to relief under any possible legal theory. [Citations.] [¶] Second, where the demurrer is sustained without leave to amend, reviewing courts determine whether the trial court abused its discretion in doing so. [Citations.] On review of the trial court's refusal to grant leave to amend, we will only reverse for abuse of discretion if we determine there is a reasonable possibility the pleading can be cured by amendment. Otherwise, the trial court's decision will be affirmed for lack of abuse. [Citations.]’ ” ( G.L. Mezzetta, Inc. v. City of American Canyon (2000) 78 Cal.App.4th 1087, 1091–1092, 93 Cal.Rptr.2d 292.)

II. Requirements for Writ of Mandate

A court may issue a writ of mandate to compel a public agency or officer to perform a mandatory duty. (Code Civ. Proc., § 1085; City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 868, 62 Cal.Rptr.3d 614, 161 P.3d 1168.) “[T]he writ will not lie to control discretion conferred upon a public officer or agency. [Citations.] Two basic requirements are essential to the issuance of the writ: (1) A clear, present and usually ministerial duty upon the part of the respondent [citations]; and (2) a clear, present and beneficial right in the petitioner to the performance of that duty [citation]. [Citation.]” ( People ex rel. Younger v. County of El Dorado (1971) 5 Cal.3d 480, 491, 96 Cal.Rptr. 553, 487 P.2d 1193.)

A ministerial act is one that a public functionary “ ‘ “is required to perform in a prescribed manner in obedience to the mandate of legal authority,” ’ ” without regard to his or her own judgment or opinion concerning the propriety of such act. ( Ridgecrest Charter School v. Sierra Sands Unified School Dist. (2005) 130 Cal.App.4th 986, 1002, 30 Cal.Rptr.3d 648.) “Thus, ‘[w]here a statute or ordinance clearly defines the specific duties or course of conduct that a governing body must take, that course of conduct becomes mandatory and eliminates any element of discretion.’ ” ( Carrancho v. California Air Resources Bd. (2003) 111 Cal.App.4th 1255, 1267, 4 Cal.Rptr.3d 536.)

While a party may not invoke mandamus to force a public entity to exercise discretionary powers in any particular manner, if the entity refuses to act, mandate is available to compel the exercise of those discretionary powers in some way. ( Ballard v. Anderson (1971) 4 Cal.3d 873, 884, 95 Cal.Rptr. 1, 484 P.2d 1345 [mandamus proper to compel the committee to consider the application for a therapeutic abortion without requiring parental consent as petitioners were not seeking to force the committee to authorize the abortion, but they were requesting that the committee be compelled to exercise its discretion to approve or disapprove the application for abortion according to the statutory criteria]; see also Sego v. Santa Monica Rent Control Bd. (1997) 57 Cal.App.4th 250, 255, 67 Cal.Rptr.2d 68 [“While mandamus will not lie to compel governmental officials to exercise their discretionary powers in a particular manner, it will lie to compel them to exercise them in some manner”].) Mandamus may also issue to correct the exercise of discretionary legislative power, but only where the action amounts to an abuse of discretion as a matter of law because it is so palpably unreasonable and arbitrary. ( Carrancho v. California Air Resources Bd., supra, 111 Cal.App.4th at pp. 1264–1265, 4 Cal.Rptr.3d 536.)

Ellena contends that the Insurance Code imposes a mandatory duty on the DOI to review group disability policy forms prior to approving the policy. Ellena acknowledges that the DOI has the discretion to decide whether to approve a policy, but maintains that the DOI must exercise that discretion by reviewing the policy to determine whether it does or does not comply with California law. Alternatively, Ellena asserts that if the DOI did review the policy and exercised its discretion, the approval of the disability policy in the present case constituted an abuse of discretion as a matter of law because the decision was unreasonable and arbitrary.

The question before us is whether Ellena has stated a viable claim for mandamus under either of her two theories. A demurrer must be overruled if the complaint states a claim on any theory. ( Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38–39, 77 Cal.Rptr.2d 709, 960 P.2d 513.)

III. Mootness

The DOI maintains that a mandamus action based on Ellena's theory and allegations that the DOI never reviewed the policy prior to approving it will have no effect on her. The DOI points out that the commissioner has the authority under section 12957 to withdraw approval of an insurance policy on a prospective...