Wolfe v. State Farm Fire & Casualty Ins. Co.

• Decision Date: 17 June 1996
• Docket Number: No. B098665,B098665
• Citation: 46 Cal.App.4th 554,53 Cal.Rptr.2d 878
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 Cal. Daily Op. Serv. 4362, 96 Daily Journal D.A.R. 7018 C. Sterling WOLFE, et al., Plaintiff and Appellant, v. STATE FARM FIRE & CASUALTY INSURANCE CO., et al., Defendants and Respondents.

Page 878

53 Cal.Rptr.2d 878

46 Cal.App.4th 554, 96 Cal. Daily Op. Serv. 4362,

96 Daily Journal D.A.R. 7018

C. Sterling WOLFE, et al., Plaintiff and Appellant, v. STATE FARM FIRE & CASUALTY INSURANCE CO., et al., Defendants and Respondents.

No. B098665.

Court of Appeal, Second District, Division 5, California.

June 17, 1996.

Raphael Metzger and Thomas F. Hall, Long Beach, for Plaintiff and Appellant.

Heller, Ehrman, White & McAuliffe, Paul Alexander, Vanessa Wells, and R. Renee Glover, Palo Alto, for Defendants and Respondents State Farm Fire and Casualty Company and State Farm Mutual Automobile Insurance Company.

Munger, Tolles & Olson, and Ronald K. Meyer, Los Angeles, for Defendant and Respondent Allstate Insurance Company.

Barger & Wolen, Kent R. Keller, Royal F. Oakes, Steven H. Weinstein, and Larry M. Golub, Los Angeles, for Defendants and Respondents Fire Insurance Exchange, Farmers Insurance Exchange, Federal Insurance Company and Hartford Fire Insurance Company.

McCutchen, Doyle, Brown & Enersen, L.L.P., James P. Kleinberg, and Carissa M. Smith, San Jose, for Defendants and Respondents Fireman's Fund Insurance Company and Associated Indemnity Corporation.

Leboeuf, Lamb, Greene & Macrae, L.L.P., Dean Hansell, Allyson S. Taketa, James R. Woods, Sanford Kingsley, and Cheryl D. Orr, San Francisco, for Defendants and Respondents United Services Automobile Association, Republic Insurance Company, and Prudential Property and Casualty Insurance Company.

Nolan B. Henderson, Glendale, for Defendant and Respondent Safeco Insurance Company of America, Inc.

Thelen, Marrin, Johnson & Bridges, Curtis A. Cole and William F. Holbrook, Los Angeles, for Defendant and Respondent TIG Insurance Company.

Pillsbury Madison & Sutro LLP, Robert M. Westberg, Reginald D. Steer, and Joseph A. Hearst, San Francisco, for Defendant and Respondent California State Automobile Association Inter-Insurance Bureau.

GODOY PEREZ, Associate Justice.

Plaintiff C. Sterling Wolfe appeals from the judgment of dismissal entered after demurrers to his complaint were sustained without leave to amend. For the reasons set forth below, we affirm the judgment.

FACTS AND PROCEDURAL HISTORY

In the early morning hours of January 17, 1994, the "Northridge earthquake" rumbled through Southern California, killing some and injuring others, while leaving a trail of destroyed or damaged homes in its wake. To those fortunate (and prescient) enough to have earthquake insurance, more than $11 billion in property damage claims were paid by their insurers. Residential real property insurers expressed both alarm at the extent of the claims and concern whether they could meet their obligations in the event of another such disaster. Because insurers offering homeowners coverage are required by law to offer earthquake insurance as well (Ins.Code, § 10081), those insurers decided to stop or reduce their sales of homeowners insurance in order to avoid writing new earthquake policies. ¹

In response, Plaintiff and appellant C. Sterling Wolfe ("appellant"), acting as a "private attorney general," filed a complaint seeking injunctive relief against 17 of the largest residential real property insurers in the state on the ground that their refusal to sell new policies was an unfair business practice under Business and Professions Code section 17200. ² Those insurers-the defendants and respondents here-are: State Farm Fire & Casualty Insurance Co.; State Farm Mutual Automobile Insurance Co.; Allstate Insurance Co.; Fire Insurance Exchange; Farmers Insurance Exchange; California State Automobile Association, aka Automobile Club of Northern California; Inter-Insurance Exchange, aka Automobile Club of Southern California; Firemans Fund Insurance Co.; Associated Indemnity Corporation; United Services Automobile Association; Safeco Insurance Co.; Federal Insurance Co.; Republic Insurance Co.; TIG Insurance Co, erroneously sued as Transamerica Insurance Co.; Hartford Fire Insurance Co.; Western Mutual Insurance Co.; and Prudential Property & Casualty Co. ³

The complaint, filed in December 1994, alleged that respondents, acting in concert, stopped or curtailed sales of new homeowners policies throughout the state. As a result, prospective homebuyers were unable to procure financing since obtaining homeowners insurance is a lending requirement. Delays in obtaining insurance would squeeze some buyers out of the market due to rising interest rates and the concomitant effect on the buyers' ability to qualify for home loans. Because of the strong public interest in fostering home ownership and the stability of the residential real estate market, contrasted against the "minimal utility" of respondents' conduct, respondents were engaged in an unfair business practice which had to be enjoined. ⁴

On December 22, 1994, the court denied appellant's application for a preliminary injunction because there was no evidence that the respondents were trying to pressure the state insurance commissioner to approve increased rates and no evidence of a conspiracy among the respondents. Shortly after, respondents demurred to the complaint on various grounds, among them that the action should be stayed under the "primary jurisdiction" doctrine to permit the insurance commissioner to administratively investigate Appellant filed a complaint with the Department of Insurance on April 6, 1995. Pursuant to Insurance Code section 790.06, state Insurance Commissioner Chuck Quackenbush ("Commissioner Quackenbush") investigated appellant's complaint during the summer of 1995. ⁶ After a special investigatory hearing, Commissioner Quackenbush determined in September 1995 that there was "neither probable cause nor substantive evidence to believe that the [respondents] are engaged in practices which are unfair or otherwise in violation of the California Insurance Code."

                the charges. 5  On April 4, 1995, the action was stayed on this ground to permit the state insurance commissioner to consider appellant's allegations.  [46 Cal.App.4th 559] The court stayed the matter until October 6, 1995, when a further hearing on the sufficiency of the demurrers would be held
                

The matter then returned to the trial court for further briefing on the propriety of respondents' demurrers. Among the many grounds raised in this second round of briefing was the contention that judicial interference in a matter involving the highly-regulated insurance industry, especially when the Legislature was taking steps to address the issue-was unwarranted and improper. In mid-October 1995, the governor signed into law A.B. 13 and A.B. 1366, two measures intended to ease the earthquake and homeowners insurance availability problem. ⁷

At a hearing on November 13, 1995, the court sustained the demurrers without leave to amend, stating in part that the issues raised were best addressed by the Legislature.

We find this ground persuasive and controlling and therefore need not address the myriad other issues raised by the parties' briefs.

STANDARD OF REVIEW

In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we must assume the truth of all facts properly pleaded by the plaintiff-appellant. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) Regardless of the label attached to the cause of action, we must examine the complaint's factual allegations to determine whether they state a cause of action on any available legal theory. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908, 274 Cal.Rptr. 186.) Reversible error is committed if the facts alleged show entitlement to relief under any possible legal theory. (Platt v. Coldwell Banker Residential Real Estate Services (1990) 217 Cal.App.3d 1439, 1444, 266 Cal.Rptr. 601.)

We will not, however, assume the truth of contentions, deductions or conclusions of fact or law (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125, 271 Cal.Rptr. 146, 793 P.2d 479), and may disregard allegations that are contrary to the law or to a fact of which judicial notice may be taken. (Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955, 199 Cal.Rptr. 789.)

We were asked by respondents on appeal to judicially notice those facts arising from the Northridge earthquake which led to their decision to halt or limit the sale of new homeowner policies even though they were not part of appellant's complaint. (See fn. 1 and accompanying text, ante.) That request was not opposed by appellant. Facts not alleged in a complaint may be judicially noticed when necessary in the interests of justice. (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 877, 6 Cal.Rptr.2d 151.) As discussed in detail post, we decline to judicially intervene because the Legislature has acted to address the homeowners insurance availability problem. To ignore the events which triggered that problem and the legislative response to it would be judicial folly. We therefore refuse to decide this matter in a factual vacuum simply because appellant has chosen to omit these critical contextual facts from his complaint.

We must take judicial notice of the Northridge earthquake itself since that occurrence is a fact of generalized knowledge so universally known that it cannot reasonably be the subject of dispute. (Evid.Code, § 451, subd. (f).) That insurers are obligated to offer earthquake coverage along with homeowners insurance is a statutory requirement under Insurance Code section 10081 and we are obligated to take judicial notice of that law. (Evid.Code, § 451, subd. (a).) That respondents stopped or curtailed new policy sales for the stated reason they were concerned about the risk being assumed and their ability to pay all claims in case of another earthquake may be judicially noticed for two reasons: (1) it is part of the record of a related administrative proceeding (Heston v. Farmers Ins. Group (1984) 160 Cal.App.3d 402, 413-414, 206...