Hoffman v. Am. Express Travel Related Servs. Co.
| Decision Date | 07 December 2012 |
| Docket Number | A127347 |
| Court | California Court of Appeals |
| Parties | WILLIAM D. HOFFMAN et al., Plaintiffs and Appellants, v. AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC., et al., Defendants and Appellants. |
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b).This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(AlamedaCounty Super. Ct.No. 2001-022881)
This consumer class action challenged the way American Express Travel Related Services Company, Inc.(Amex) billed customers for its fee-based, per-trip travel insurance programs.After almost a decade of litigation and a lengthy bench trial, the court granted judgment for defendantsAmex and Amex Assurance Company(Amex Assurance).On appeal, plaintiffs challenge the pretrial grant of summary adjudication on their claims for conversion and unjust enrichment and assert the trial court misinterpreted key contract terms in deciding the first phase of the trial.Thus, they maintain, it erroneously rejected their contractual and statutory claims.We conclude there was no error, and affirm.
Amex offers flight and baggage insurance programs, primarily underwritten by Amex Assurance, through which enrolled cardholders are automatically billed a premium for flights charged to their American Express card.William Hoffman sued Amex and Amex Assurance on behalf of a class of present and former American Expresscardholders who had purchased travel insurance since 1983.Plaintiffs' operative complaint alleged that Amex said it would bill enrolled cardholders for travel insurance only when they actually flew, and would refund or credit premiums assessed for cancelled flights and unused tickets.Instead of doing so, plaintiffs alleged that Amex engaged in a scheme to cheat and defraud its cardholders by assessing premiums for trips it knew were never taken, billed cardholders for services they did not receive, billed for flight insurance when cardholders upgraded a ticket or changed a reservation, and failed to refund premiums when flights were cancelled.(SeeAviation Data, Inc. v. American Express Travel Related Services Co., Inc.(2007)152 Cal.App.4th 1522, 1526.)The complaint asserted causes of action for breach of contract, unjust enrichment, conversion, and deceptive business practices under New York and California statutes.
The trial court granted summary adjudication for Amex on plaintiffs' unjust enrichment and conversion claims.The remaining causes of action were tried in two phases.Phase I identified the documents that constituted the relevant contract and resolved disputes about its interpretation.The court determined that the contract consisted of master insurance policy agreements, descriptions of coverage, and cardholder enrollment forms.After it identified the contractual language, the court found the disputed terms were not ambiguous and that they expressly authorized the billing practices plaintiffs alleged were improper or illegal.The court further found Amex had no contractual obligation to refund or credit incorrect charges for premiums unless requested by the cardholder and that the cardholder's request for a refund was a condition precedent to Amex's obligation to provide one.
Phase II of the trial addressed whether Amex's billing and refund practices for the travel insurance programs violated New York and California statutes, whether the contract terms as construed in Phase I were unconscionable, and whether cardholders were equitably excused for failing to request refunds.After plaintiffs rested their case in chief, Amex successfully moved for judgment on all claims.This appeal challenges the court's findings after trial and its prior summary adjudication rulings on conversion and unjust enrichment.
Plaintiffs' primary contention in this appeal challenges the trial court's interpretation of what the parties refer to as the "Billing Term."It provides:
(Wolf v. Walt Disney Pictures & Television(2008)162 Cal.App.4th 1107, 1126.)The trial court found the Billing Term was not ambiguous on its face; that extensive extrinsic evidence received provisionally at trial (seeid. at p. 1126-1127) did not reveal any latent ambiguity; and, assuming arguendo that the contract language was ambiguous, the extrinsic evidence did not alter its import.
Plaintiffs contend the court erred when it interpreted the phrase "there may be occasions" that begins the last sentence of the Billing Term.They argue that this phrase permits only infrequent billing mistakes that are due to non-systematic causes — i.e., those not caused by the system "automatically and routinely" charging a premium everytime an enrolled cardholder incurred an airline charge over a threshold amount.Amex, on the other hand, contends the contracts permit it to bill enrolled cardholders when they use their American Express cards for airline charges other than tickets, and that the disputed sentence says nothing about how frequently this might occur for any given cardholder or whether its occurrence may be due to limitations in Amex's computer billing program.
We review the court's interpretation of the disputed contract language de novo.(Steiner v. Thexton(2010)48 Cal.4th 411, 417-418, fn 7;Parsons v. Bristol Development Co.(1965)62 Cal.2d 861, 864, 865-867[].)
The policies provide that cardholders are covered by trip insurance, and assessed a premium, whenever they use their American Express cards to purchase scheduled airline tickets for a trip actually taken by "covered persons," generally defined as enrolled cardholders and specified family members and business associates.However, the information that airlines and travel agencies provided to Amex about ticket purchases and other travel-related charges was often insufficient to identify whether the passenger was a "covered person," whether a ticket was used or cancelled, or whether a charge was for a ticket or other services such as an upgrade, itinerary change or excess baggage fee.Before and during the 13-year class period (1995-2008) Amex made various changes to its billing system to prevent non-covered transactions from triggering premiums.For example, it stopped billing premiums on transactions for enrollees that were below a certain dollar threshold (the precise amount varied from $40 to $49 at various points in time during the class period).It also instituted various transaction codes for airlines to use so the computer billing system would discriminate between premium and non-premium transactions.However, Amex was unable to automatically screen out all inappropriate charges or consistently provide automatic refunds.
Important context to the meaning of "there may be occasions" as it appears in the Billing Term is derived from its origin as a negotiated phrase in the 1983 settlement oftwo prior class actions, referred to as the Lifschitz-Corrado settlement.Like the current action, the Lifschitz-Corrado litigation alleged that Amex failed to adequately disclose it would assess premiums on non-ticket charges and tickets purchased for non-covered passengers and would not automatically refund premiums for cancelled tickets.As part of the settlement, Amex agreed to modify its travel insurance enrollment form to state that "there may be occasions" when charges are billed to the cardholder "for cancelled trips, uninsured persons, itinerary changes, ticket upgrading, non-scheduled airline flights, baggage or other such non-covered airline services."The modified enrollment form also included an agreement by the cardholder to contact Amex for a refund of any improper charges.
At the conclusion of Phase I, the court rejected plaintiffs' interpretation of the Billing Term and agreed with Amex's....
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