Villanueva v. Fid. Nat'l Title Co.

• Citation: 11 Cal.5th 104,482 P.3d 989,276 Cal.Rptr.3d 209
• Decision Date: 18 March 2021
• Docket Number: S252035
• Parties: Manny VILLANUEVA et al., Plaintiffs and Appellants, v. FIDELITY NATIONAL TITLE COMPANY, Defendant and Appellant.
• Court: California Supreme Court

11 Cal.5th 104

482 P.3d 989

276 Cal.Rptr.3d 209

Manny VILLANUEVA et al., Plaintiffs and Appellants,

v.FIDELITY NATIONAL TITLE COMPANY, Defendant and Appellant.

S252035

Supreme Court of California.

March 18, 2021

Chavez & Gertler, Nance F. Becker,San Francisco, Mark A. Chavez, Mill Valley; The Kick Law Firm, Taras Kick, Thomas Segal ; Shernoff Bidart Escheverria, Michael J. Bidart, Claremont; The Bernheim Law Firm, Steven J. Bernheim, Nazo S. Semerjian; Friedman Rubin and Richard H. Friedman for Plaintiffs and Appellants.

Olivier Schreiber & Chao, Monique Olivier, San Francisco; Allison M. Zieve for Public Citizen and Public Justice as Amici Curiae on behalf of Plaintiffs and Appellants.

Amy Bach, Mill Valley, and Mark Dillman for United Policyholders as Amicus Curiae on behalf of Plaintiffs and Appellants.

Arkin Law Firm and Sharon J. Arkin for Consumer Attorneys of California as Amicus Curiae on behalf of Plaintiffs and Appellants.

Xavier Becerra, Attorney General, Jonathan L. Wolff, Chief Assistant Attorney General, Lisa W. Chao, Karen W. Yiu and Heather B. Hoesterey, Deputy Attorneys General, Joshua A. Klein, Deputy State Solicitor General, for California Department of Insurance as Amicus Curiae on behalf of Plaintiffs and Appellants.

Harvey Rosenfield and Pamela Pressley, Santa Monica, for Consumer Watchdog, Consumer Federation of America and Consumer Federation of California as Amici Curiae on behalf of Plaintiffs and Appellants.

Hahn Loeser & Parks, Michael J. Gleason,San Diego, Rupa G. Singh, Erica L. Calderas, Steven A. Goldfarb ; California Appellate Law Group, Ben Feuer, San Francisco, Julia Partridge and Greg Wolff, San Francisco, for Defendant and Appellant.

Dentons US, Ronald D. Kent, Newport Beach, Joel D. Siegel, Los Angeles, Sonia R. Martin, Oakland, and Susan M. Walker, Los Angeles, for California Land Title Association as Amicus Curiae on behalf of Defendant and Appellant.

Arthur E. Davis III for American Escrow Association as Amicus Curiae on behalf of Defendant and Appellant.

Opinion of the Court by Kruger, J.

The Insurance Code requires title insurers and title companies to file most rates with the Insurance Commissioner before charging those rates to consumers. ( Ins. Code, §§ 12401.1, 12401.7, 12414.27.) The issue in this case is whether, if a title insurer charges rates without filing them, a consumer can challenge the charges as unlawful in court. The insurer in this case argues the answer is no for two reasons. First, it asserts entitlement to immunity under a provision barring suits under noninsurance laws for any "act done, action taken, or agreement made pursuant to the authority conferred" by the rate-filing statutes. (Id. , § 12414.26.) Second, it argues that under other provisions of the Insurance Code, unfiled-rate claims are committed to the exclusive jurisdiction of the Insurance Commissioner.

We reject both arguments. The statutory immunity for "act[s] done ... pursuant to the authority conferred" ( Ins. Code, § 12414.26 ) by the rate-filing statutes does not shield title insurers from suit for charging unauthorized rates, and the Insurance Commissioner does not have exclusive jurisdiction over such claims. We reverse the judgment of the Court of Appeal, which reached the opposite conclusion on both questions, and remand for further proceedings.

I.

When plaintiff Manny Villanueva (Villanueva) and his wife Sonia refinanced the mortgage on their home, defendant Fidelity National Title Company (Fidelity) handled the escrow and Fidelity National Title Insurance Company supplied title insurance. For its services, Fidelity charged the Villanuevas an escrow fee, overnight delivery fee, courier fee, and draw deed fee (i.e., a fee for preparing a new deed).

Villanueva later sued Fidelity, asserting that the delivery, courier, and draw deed fees added to the Villanuevas' escrow statement were illegal because they had never been filed with the Insurance Commissioner (Commissioner). (See Ins. Code, §§ 12401.7 ["No title insurer ... shall use any rate in the business of title insurance ... prior to the filing" and public display of the rate], 12414.27.) The original complaint alleged a range of common law claims and a statutory claim under the unfair competition law. ( Bus. & Prof. Code, § 17200 et seq. (UCL).)¹ Subsequent motions eliminated the common law claims, leaving only the UCL claim. Villanueva sought to certify a class of similarly situated consumers, and the court granted the motion.

Following a bench trial, the court determined that Fidelity was required to file its rates with the Commissioner, that document delivery was a service for which a rate filing was required, and that Fidelity had not filed its delivery service rate. The court further determined that, for the first two years of the class period, Fidelity had no rate on file for drawing deeds or document preparation, and thus during that period, the fee for drawing up a deed was also illegal.

The trial court rejected Fidelity's argument that it should be held immune from Villanueva's suit under Insurance Code section 12414.26 ( section 12414.26 ). The court reasoned that the section insulates from suit only those actions that are authorized by relevant provisions of the Insurance Code.

Because those provisions do not authorize charging unfiled rates, section 12414.26 immunity did not apply.

Based on its findings, the trial court granted the class injunctive relief. But it denied restitution on the ground that the rates charged were disclosed to and approved by Villanueva and other class members, who received the benefit of their bargain, the services for which they paid.²

Both sides appealed. The Court of Appeal reversed in part and ordered the trial court to enter judgment dismissing the suit. ( Villanueva v. Fidelity National Title Co. (2018) 26 Cal.App.5th 1092, 1136, 237 Cal.Rptr.3d 702.) It concluded the class claims were barred for two independent reasons. First, reversing the trial court, the Court of Appeal held that Fidelity was in fact immune from Villanueva's suit under section 12414.26. Invoking language from Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 77 Cal.Rptr.2d 709, 960 P.2d 513 ( Quelimane ), the Court of Appeal reasoned that immunity under the statute extends to all " ‘ratemaking-related activities,’ " a category that includes the charging of unfiled rates. ( Villanueva , at p. 1124, 237 Cal.Rptr.3d 702, quoting Quelimane , at p. 46, 77 Cal.Rptr.2d 709, 960 P.2d 513.) Second, the court held that the statutory scheme affords consumers charged unfiled rates only one avenue of redress: an administrative complaint submitted to the Commissioner pursuant to article 6.7 ( Ins. Code, §§ 12414.13 – 12414.19 ) of the title insurance chapter. The Court of Appeal concluded the trial court therefore lacked jurisdiction to consider the merits of Villanueva's suit. ( Villanueva , at pp. 1126–1128, 237 Cal.Rptr.3d 702.)

We granted review to consider both components of the Court of Appeal's ruling.

II.

Title insurance "is a customary incident of practically every California real estate transaction," including a sale or refinancing. ( Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 314, 70 Cal.Rptr. 849, 444 P.2d 481 ; see 3 Miller & Starr, Cal. Real Estate (4th ed. 2020) § 7:1, pp. 7-13 to 7-14.) Title insurers insure "the record title of real property for persons with some interest in the estate, including owners, occupiers, and lenders." ( FTC v. Ticor Title Ins. Co. (1992) 504 U.S. 621, 625, 112 S.Ct. 2169, 119 L.Ed.2d 410.) A title insurance policy is not a guarantee as to the state of the property's title. ( Quelimane , supra , 19 Cal.4th at p. 41, 77 Cal.Rptr.2d 709, 960 P.2d 513 ; Siegel v. Fidelity Nat. Title Ins. Co. (1996) 46 Cal.App.4th 1181, 1191, 54 Cal.Rptr.2d 84.) It instead offers indemnification to the insured against many losses arising from title defects not disclosed in the title policy or report, as well as errors by the entity performing the title search. ( Ins. Code, §§ 104, 12340.1, 12340.2 ; see Ticor Title , at pp. 625–626, 112 S.Ct. 2169.)

Title insurance differs in some respects from other forms of insurance.

While most other forms of insurance provide protection against future loss, title insurance instead relates to the past; it protects against undisclosed encumbrances and defects in title that exist at the time the policy is issued. ( Quelimane , supra , 19 Cal.4th at p. 41, 77 Cal.Rptr.2d 709, 960 P.2d 513 ; King v. Stanley (1948) 32 Cal.2d 584, 590, 197 P.2d 321.) Thus, rather than requiring periodic, ongoing premiums to obtain continuing future coverage, title insurance requires a one-time payment ( Wolschlager v. Fidelity National Title Ins. Co. (2003) 111 Cal.App.4th 784, 789, 4 Cal.Rptr.3d 179 ) compensating for the risk assumed and the services rendered in connection with researching and preparing the policy (see Ins. Code, § 12340.7 ). Notwithstanding these differences, title insurance and title insurance rates are subject to regulation by the Insurance Commissioner, just like more classical forms of insurance and insurance premiums. (See Ins. Code, §§ 12340 – 12418.4.)

The work involved in supplying a title insurance policy is often divided between the title insurer and other entities. Fidelity is what is known as an "underwritten title company," meaning a company that conducts the title search and prepares a preliminary title report and may also collect fees and issue the policy on behalf of the title insurer. (See Ins. Code, §§ 12340.4, 12340.5 ; Title Ins. Co. v. State Bd. of Equalization (1992) 4 Cal.4th 715, 720, 14 Cal.Rptr.2d 822, 842 P.2d 121.) For the regulatory purposes at issue here, title insurers and underwritten title companies are treated alike. (See, e.g., Ins. Code, §§ 12401.1, 12401.2, 12401.7, 12401.71.) For convenience, therefore, we will refer to both as simply "title insurers."

The Insurance Code requires all title...