An Express Article from the California Land Title Association
Bulletin 13/14-15 - August 8, 2013
The California Supreme Court has just handed down a decision holding that whenever a plaintiff alleges conduct that violates Section 790.03 of the Unfair Insurance Practices Act (UIPA), that conduct can form the basis of a lawsuit under California’s Unfair Competition Law (UCL), where the conduct also violates some other statute or the common law. The case is entitled Zhang v. Superior Court and was pending in the California Supreme Court for over three years before being handed down on August 1st.
The general rule had been that direct actions by insureds against their own insurance companies based on violations of the UIPA were barred. Now, if an action allegedly violates not only the UIPA but also some other statute or common law, then the alleged violation may be the basis of a UCL claim. The court did make it clear that the existing rule that the remedies available under the UCL are limited to restitution and injunctive relief, but not compensatory damages, is unchanged.The reasoning behind the prior limitation on direct actions against insurers was that the UIPA created a regulatory scheme that granted the Insurance Commissioner the role of regulating insurance company conduct. By allowing a UCL lawsuit to proceed, the Supreme Court has diminished the Commissioner's role in regulating insurance companies and given a greater role to litigants, juries and judges.