Southern California Title Co. v. Great Western Financial Corp.
| Citation | 60 Cal.Rptr. 114 |
| Court | California Court of Appeals Court of Appeals |
| Decision Date | 15 June 1967 |
| Parties | SOUTHERN CALIFORNIA TITLE COMPANY and California Land Title Company, Plaintiffs and Appellants, v. GREAT WESTERN FINANCIAL CORPORATION, A Delaware Corporation, Great Western Savings and Loan Association, a California Corporation, and the twenty-five escrow companies referred to as Liberty, Sherwood Escrow Co., Summit Title Company, American Title Company, Security Title Insurance Company, Financial Corp. of America and Lehman Brothers, Defendants and Respondents. Civ. 30851. |
Tremaine & Shenk, Jerrold A. Fadem, Los Angeles, for appellants.
Hastings & Lasker, Beverly Hills, for Great Western Financial Corporation, Great Western Savings and Loan Ass'n and Liberty.
McKenna & Fitting, Los Angeles, Milton Davis, Beverly Hills, Les J. Weinstein, Los Angeles, for Sherwood Escrow Co., and Summit Title Co Jones & Maupin, Los Angeles, for American Title Co.
Milo V. Olson, Los Angeles, for Security Title Ins. Co. and Financial Corp. of America.
Adams, Duque & Hazeltine, Lawrence T.Lydick, Los Angeles, Richard W. Luesebrink, Santa Monica, for Lehman Brothers.
Plaintiffs appeal from an order of dismissal entered after the court sustained the demurrers of respondents, variously, denied leave to amend and finally struck the fourth amended complaint in its entirety upon the representation by plaintiffs' counsel that no further facts could be alleged.
We confine our attention herein to the most recently filed fourth amended complaint since "The court on appeal will not consider the sufficiency of a superseded complaint where the plaintiff has amended it after demurrer sustained." (Rolley, Inc. v. Merle Norman Cosmetics, 129 Cal.App.2d 844, 852, 278 P.2d 63, 282 P.2d 991.) We are, moreover, not concerned with the grounds for special demurrer urged upon the trial court since the general demurrer was sustained without leave to amend and the complaint was stricken upon appellants' representation that no further facts could be alleged. We shall consider primarily the merits of that decision and, unless at least one cause of action is clearly stated, sustain the order of dismissal. (Southall v. Security Title Ins. Etc. Co., 112 Cal.App.2d 321, 323, 246 P.2d 74; Morris v. National Federation of the Blind, 192 Cal.App.2d 162, 164, 13 Cal.Rptr. 336.) We are constrained to determine only whether appellants state a cause of action, not whether they might have been able to do so. (Lemoge Electric v. County of San Mateo, 46 Cal.2d 659, 664 297 P.2d 638; Levinson v. Bank of America, 126 Cal.App.2d 122, 125, 271 P.2d 632.) The unverified fourth amended complaint, evolved over a period of more than two years of argument through law and motion, is presented to us without showing by brief that appellants could or would be willing to amend further. We conclude that the court did not, by the action taken, abuse it discretion since the pleadings are not susceptible of a construction that might entitle appellants either to injunctive relief or to damages.
Appellants attempt by their complaint to impose upon respondents treble damages for asserted violations of the antitrust, price discrimination and unfair trade practices sections of the Business and Professions Code, and also accuse respondents of the common law tort of interference with advantageous business or contractual relations. The issues as framed by appellants' brief are (1) whether parties allegedly damaged by the wrongdoing of competitors in violation of the subject statutes are entitled to the civil remedies of injunction and/or indemnity, and (2) whether the allegedly injured parties are entitled to damages from certain competitors, who, by a conspiracy to provide rebates, intentionally induce a prime customer to transfer its business to the wrongdoers. We must determine, more particularly, whether the superior court has jurisdiction to entertain an action based upon appellants' theories, or any of them, and, if so, whether appellants have stated a cause of action against any of the various named defendants. The latter finding, which is determinative, is in the negative.
The complaint alleges that Lehman Brothers, an investment firm and a partnership, owns a major or controlling interest in Great Western Financial Corporation (hereinafter sometimes referred to as Great Western) and in Financial Corporation of America (hereinafter sometimes referred to as Financial) both of which are financial holding companies. Great Western, in turn, owns Great Western Savings and Loan (hereinafter sometimes referred to as Great Western S & L) and a group of 25 individually named escrow companies hereinafter referred to collectively as Liberty. Financial owns title insurer Security Title Insurance Company (hereinafter sometimes referred to as Security); Financial and Great Western together own American Title Company (sometimes hereinafter referred to as American). All of these interrelated businesses are named as defendants together with two other companies operating under the same, but distinct and independent, ownership known as Summit Title Company (hereinafter sometimes referred to as Summit) and Sherwood Escrow Company (hereinafter sometimes referred to as Sherwood).
The complaint further alleges that appellants are corporations, each qualified to do business in California as an "underwritten title company." The "underwritten title company" (hereinafter sometimes called "title company") is described by code as a "person engaged in the business of preparing title searches, title examinations, certificates or abstracts of title upon the basis of which a title insurer regularly writes title policies * * *." (Ins.Code, § 12402.) Title insurance, which is a customary incident of practically every California real estate transaction, may be sold either by a title insurer or a title company, and both are regulated by the insurance commissioner, must be licensed, meet certain minimum capital requirements, submit to examination and audit, and may have licenses seized or revoked for financial instability or other regulatory infractions. (Ins.Code, §§ 12396 and 12411.) The title insurer is entitled to perform the search and abstract functions, as well as to issue the policy. The title company which performs only search and abstract work, may engage in the escrow business within statutory limitations. It is specifically contemplated that the title company shall contract to do the preliminary work for a title insurer and then distribute the policy of insurance, the risk of which is underwritten by the title insurer, in return for an appropriate division of fees. (Ins.Code, § 1242.)
Appellant title companies, therefore, compete directly with both Summit and American in Los Angeles County. All three either must do business with or compete with Security, and it is common knowledge that all compete with the long dominant Title Insurance and Trust Company and every other concern qualified to transact title business in this county.
It is appellants' theory that all respondents, including the powerful Lehman Brothers investment banking company, have conspired under the impetus of common interest to violate statutory prohibitions and intentionally interfere with appellants' business to their financial damage. Appellants contend that by virtue of this combination respondents, all and variously, have interfered with their business relationships, violated the California law of antitrust and unfair trade practices, and the Insurance Code. In appellants' words, they charge that defendants "conspired to pay an illegal rebate to lure away customers of the Plaintiffs, and to boycott the Plaintiffs, along with a battery of other acts forbidden by statute." It is the thrust of these allegations that the acts of the various respondents constitute a fraud on appellants which justifies and, indeed, compels the piercing of corporate veils to disclose an identity of interests between the Lehman-owned companies on the one hand the Sherwood and Summit shareholders on the other. The facts, however, are sparse and incomplete.
The California law of antitrust, commonly known as the Cartwright Act (Bus. & Prof.Code, §§ 16700-16800) is patterned upon the federal Sherman Act and both have their roots in the common law; hence federal cases interpreting the Sherman Act are applicable with respect to the Cartwright Act. (Milton v. Hudson Sales Corp., 152 Cal.App.2d 418, 313 P.2d 936; Rolley, Inc. v. Merle Norman Cosmetics, supra, 129 Cal.App.2d 844, 278 P.2d 63, 282 P.2d 991.) In 1961 California incorporated in essence also section 3 of that federal legislation known as the Clayton Act (Bus. & Prof.Code, § 16727) which goes beyond common law and the Sherman Act to inhibit trade restraints at their inception, and federal interpretations thereof are similarly persuasive. (Milton v. Hudson Sales Corp., supra.) We are persuaded by California and federal authorities that appellant's vague and conclusionary pleadings fail to allege facts which might reasonably be construed to reveal a wrongful combination.
Indeed, as to Lehman Brothers, the only ultimate facts alleged are that Lehman Brothers is a partnership, that it owns stock in Great Western and Financial and that at times it has had two or more directors concurrently on the boards of Great Western and Financial, respectively. Thus, Lehman Brothers stands at the investment apex of a pyramid of control which can be reached only by means of factual allegations of conduct on the part of related defendants from which a conspiracy or combination with the intent to jeopardize appellants' business may be inferred. The same analysis applies to Great Western and Financial in their passive administrative role as holding companies, Great Western S & L as a lender relatively remote from the scene, and even Security which, as...
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