Tabares v. EquiTrust Life Ins. Co. CA2/7 ( 2015 )


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  • Filed 10/19/15 Tabares v. EquiTrust Life Ins. Co. CA2/7
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION SEVEN
    DANIEL TABARES et al.,                                               B254409
    Plaintiffs and Appellants,                                  (Los Angeles County
    Super. Ct. No. BC390195)
    v.
    ORDER MODIFYING OPINION
    EQUITRUST LIFE INSURANCE                                                 AND DENYING REHEARING
    COMPANY,                                                                 (NO CHANGE IN JUDGMENT)
    Defendant and Respondent.
    THE COURT:
    The court has read and considered respondent’s request for modification of
    opinion and appellants’ petition for rehearing filed on October 13, 2015. It is ordered
    that the opinion filed herein on September 28, 2015 be modified as follows:
    On page 4, section 2 of the Factual and Procedural Background, the first full
    paragraph is deleted and the following paragraph is inserted in its place:
    The named plaintiffs purchased different EquiTrust annuities. According to
    the operative complaint, Daniel and Rhodora Tabares were approached by
    defendant Joseph Sackey at their worksite, the Los Angeles County
    Metropolitan Transportation Authority (MTA). Sackey held himself out as a
    financial planner and annuity specialist who had assisted more than 100 MTA
    retirees find profitable investments for their government pensions. In May
    2006 Sackey convinced Daniel, a 23-year employee of the MTA, to retire early
    and roll his entire government pension of more than $395,000 into a
    MarketValue Index annuity issued by EquiTrust. Based on Sackey’s
    representations, Daniel understood he would begin to receive monthly interest
    payments of $2,500 shortly after issuance of the annuity. Contrary to that
    representation, the annuity purchased by Daniel did not provide for
    commencement of immediate payments. Further, instead of the high returns
    promised by Sackey, the annuity bore a minimum guaranteed interest rate
    ranging from 1.5 to 2 percent, and only 87.5 percent of Daniel’s investment
    was guaranteed from loss. Any withdrawals from the annuity within the first
    10 years of purchase were subject to substantial surrender charges of up to
    12 percent. Daniel was never shown a sample contract before the sale. He
    never incurred a surrender charge or MVA.
    There is no change in judgment. Appellants’ petition for rehearing is denied.
    _______________________________________________________________________
    PERLUSS, P. J.         ZELON, J.               SEGAL, J.
    2
    Filed 9/28/15 Tabares v. EquiTrust Life Ins. Co. CA2/7 (unmodified version)
    Appendix attached
    NOT TO BE PUBLISHED IN THE 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.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION SEVEN
    DANIEL TABARES et al.,                                               B254409
    Plaintiffs and Appellants,                                  (Los Angeles County
    Super. Ct. No. BC390195)
    v.
    EQUITRUST LIFE INSURANCE
    COMPANY,
    Defendant and Respondent.
    APPEAL from orders of the Superior Court of Los Angeles County, Anthony J.
    Mohr and Lee Smalley Edmon, Judges. Affirmed.
    Law Offices of Robert S. Gerstein, Robert S. Gerstein; Gianelli & Morris, and
    Robert S. Gianelli, for Plaintiffs and Appellants.
    Amy R. Bach and Daniel R. Wade for United Policyholders as Amicus Curiae on
    behalf of Plaintiffs and Appellants.
    Reed Smith, Margaret M. Grignon, Robert D. Phillips, Jr., James C. Martin,
    Zareh A. Jaltorossian, Kathy J. Huang and Thomas A. Evans, for Defendant and
    Respondent.
    _________________________
    This class action was filed in 2008 by purchasers of EquiTrust Life Insurance
    Company’s deferred equity-indexed annuities. Named plaintiffs Daniel and Rhodora
    Tabares, Judy L. Taylor, Elizabeth Young and Judith Gilbert appeal from orders granting
    EquiTrust’s motion for summary adjudication of their contract claims, denying class
    certification of their claim under the unfair competition law (Bus. & Prof. Code, § 17200
    et seq.) (UCL) and denying their request to add Young and Gilbert as class
    representatives on the cause of action for declaratory relief. We affirm.
    FACTUAL AND PROCEDURAL BACKGROUND
    1. The Financial Products Sold Here
    The EquiTrust annuity products challenged in this action include the MarketValue
    Index, the MarketPower Bonus Index, the MarketBooster Index and the MarketTen
    Bonus Index. All are equity-indexed annuities, meaning that some portion of the
    premium may be allocated to one or more accounts that link the crediting of interest to
    the performance of the Standard & Poor’s 500 stock index. Annuity purchasers may also
    allocate premiums to a fixed rate account, which credits interest to the annuity according
    to a preset fixed rate reset at the beginning of each year. EquiTrust sets a new renewal
    rate each year depending on a number of factors, although the annuity contracts identify a
    guaranteed minimum interest rate below which the fixed rate will never fall. Equity-
    indexed accounts include “index caps,” which cap the interest rate a purchaser can
    accrue. Initial index caps are fixed for the first year of each annuity but are reset monthly
    or annually depending on the account selected by the purchaser. As with the fixed rate
    accounts, renewal index caps are calculated based on a number of cost factors and may
    not fall below a guaranteed minimum during the life of the contract. The contracts
    specify that at no point may the interest rate be a negative figure, even if the equity index
    suffers a loss (negative growth). Thus, when a purchaser allocates premiums to an
    equity-indexed account, the account is contractually guaranteed a return between zero
    percent and the index cap.
    Three of the four annuity contracts also provided bonuses tied to the amount of
    premiums paid into the annuities. The contracts defined “Premium Bonus” as “the
    2
    amount, if any, equal to the Premium (the amount deposited by the purchaser within the
    relevant time period, usually one year) multiplied by the Premium Bonus Percentage
    shown in the Contract Data Page.” Premium bonuses were added to the premiums to
    increase the total Accumulation Value (defined as the premiums paid as augmented by
    any premium bonuses, plus interest credited and less any withdrawals) of the annuity. As
    EquiTrust admits, it treats the bonuses it pays as a fixed cost factored into its calculation
    of the initial rate and the index caps. Based on these contracted rates, which are usually
    lower than the rates provided in a non-bonus product, EquiTrust recoups the cost of the
    bonus over time.
    EquiTrust sold its annuity products through independent sales agents compensated
    by commissions that were calculated as a percentage of the premiums paid into the
    annuity contracts sold. Commissions were not deducted directly from purchasers’
    premium funds but, like premium bonuses, were considered fixed costs and were factored
    into the initial rates and caps.
    Annuities carry an early withdrawal penalty known as a surrender charge. A
    surrender charge is calculated as a percentage of the Accumulation Value that decreases
    over time, typically 10 to 12 years, sometimes as long as 15 years. The longer an annuity
    holder waits to withdraw his or her funds, the smaller the withdrawal penalty becomes;
    when the annuity reaches maturity, the surrender charge disappears. Until then, with
    limited exceptions, an annuity holder only has access to the Cash Surrender Value of the
    annuity.1 Under the terms of the contracts, the Cash Surrender Value is the greater of
    either (1) the Accumulation Value less a surrender charge multiplied by a Market Value
    Adjustment (MVA), a figure derived from a preset formula linked to the starting and
    1
    EquiTrust’s annuity contracts allow a holder to make annual withdrawals (“partial
    surrenders”) of up to 10 percent of the full Accumulation Value. Moreover, if the
    annuity holder dies, the contracts specify that the full Accumulation Value is payable to
    the annuitant’s beneficiary.
    3
    current value of United States Treasury bonds,2 or (2) a Minimum Guaranteed Contract
    Value, which is calculated as a percentage of the premiums actually paid, excluding any
    premium bonuses and withdrawals.
    The cover page of the annuities sold by EquiTrust contained a number of advisory
    statements, including the following “important notice to owners age 60 or older”: “This
    contract may be returned within 30 days from the date you received it for a full refund by
    returning it to the insurance company or agent who sold you this contract. After 30 days,
    cancellation may result in a substantial penalty, known as a surrender charge. The
    surrender charges associated with this contract can be found on the contract data page.”
    Also on the cover sheet, below the EquiTrust signatures, was the following caution:
    “Cash surrender values may increase or decreased based on the equity index and market
    value adjustment features of this contract. . . .” The contract data page in turn disclosed
    the premium paid, the premium bonus percentage and amount, the minimum interest rate
    applicable to the plan, the duration of the MVA in years and the applicable percentage of
    the surrender charge over time. A cover sheet from one of the EquiTrust annuities is
    reproduced as an appendix to this opinion.
    2. The Named Plaintiffs
    The named plaintiffs purchased different EquiTrust annuities. According to
    Daniel and Rhodora Tabares, they were approached by defendant Joseph Sackey at their
    worksite, the Los Angeles County Metropolitan Transportation Authority (MTA).
    Sackey held himself out as a financial planner and annuity specialist who had assisted
    more than 100 MTA retirees find profitable investments for their government pensions.
    In May 2006 Sackey convinced Daniel, a 23-year employee of the MTA, to retire early
    and roll his entire government pension of more than $395,000 into a MarketValue Index
    2
    The MVA, which is expressed in the contract as a mathematical formula, adjusts
    the policy’s cash surrender value based on fluctuations in interest rates between purchase
    and surrender. According to EquiTrust, the MVA compensates EquiTrust for the cost of
    liquidating long-term investments when a policy holder prematurely surrenders all or part
    of his or her annuity. The MVA can cause either an increase or decrease in the otherwise
    applicable surrender charge and is a common feature of indexed annuities.
    4
    annuity issued by EquiTrust. Based on Sackey’s representations, Daniel understood he
    would begin to receive monthly interest payments of $2,500 shortly after issuance of the
    annuity. Contrary to that representation, the annuity purchased by Daniel did not provide
    for commencement of distribution payments until 2061 when Daniel would be more than
    100 years old. Further, instead of the high returns promised by Sackey, the annuity bore
    a minimum guaranteed interest rate ranging from 1.5 to 2 percent, and only 87.5 percent
    of Daniel’s investment was guaranteed from loss. Any withdrawals from the annuity
    within the first 10 years of purchase were subject to substantial surrender charges of up to
    12 percent. Daniel was never shown a sample contract before the sale. He never
    incurred a surrender charge or MVA.
    Judy Taylor purchased a MarketPower Bonus Index annuity from an independent
    agent in 2008. She was shown a sales brochure and signed a disclosure statement but
    was not provided with a sample contract before the sale. She never incurred a surrender
    charge or MVA.
    Elizabeth Young, who was added as a named plaintiff in the fourth amended
    complaint, purchased a MarketPower Bonus Index annuity in 2006. She surrendered her
    annuity in 2007. Judith Gilbert, added as a named plaintiff in the fifth amended
    complaint, purchased a MarketTen Bonus annuity in 2008. Although she incurred some
    surrender charges when she surrendered her annuity in 2012, this loss was offset in part
    by application of the MVA, which decreased the surrender charge as a result of the steep
    declines in the market after she purchased the annuity.
    3. The Class Certification Proceedings
    Plaintiffs filed their initial class action complaint in May 2008 and third amended
    complaint in September 2009. The third amended complaint alleged that abuses in the
    sale of deferred annuities, typified by unlawful and deceptive sales tactics, had become a
    growing problem in California. According to plaintiffs, EquiTrust improperly shifted the
    cost of paying its agents’ commissions to annuity holders by reducing the annuity’s
    credited earnings; shifted the cost of paying a promised 10 percent bonus on some
    annuities to the holders by reducing the annuity’s credited earnings; disguised a
    5
    significant portion of its surrender charge penalty by applying the MVA to hedge losses
    on interest rates; and failed to identify the MVA as a surrender charge on the cover page
    of annuities sold to seniors (age 60 or older), as required by Insurance Code
    section 10127.13 (section 10127.13).
    Plaintiffs moved for certification of two classes in December 2009: (1) all
    California residents who had purchased one of four specified deferred annuity insurance
    contracts from EquiTrust; and (2) all California residents over the age of 60 who had
    purchased one of the four annuities. On August 2, 2010 the court granted certification on
    two claims: (1) the contract cause of action on the theory EquiTrust had breached the
    covenant of good faith and fair dealing by manipulating renewal rates and caps to recoup
    the costs of commissions and bonuses; and (2) the declaratory relief cause of action for
    the second (senior) class based on the alleged violation of section 10127.13. The court
    denied certification of the fraud and UCL causes of action as to both classes on the
    ground there was no evidence either Tabares or Taylor, the only two named plaintiffs at
    this point, had actually relied on misrepresentations made by EquiTrust and thus lacked
    standing under the UCL. With respect to Taylor, the court also found she was an
    inadequate class representative because of discrepancies between her deposition
    testimony and her signed declaration: Taylor remembered virtually nothing about the
    provisions of the annuity she had purchased or disclosures made to her about its
    provisions. Because Taylor was at the time the only named plaintiff aged 60 or older, the
    senior class was left without a named class representative.
    In response to the certification order plaintiffs filed a motion seeking clarification
    or reconsideration with respect to the issue of reliance for the UCL claim and for leave to
    add a new class representative for the senior class. On January 26, 2011 the court denied
    the request for reconsideration on the reliance standard. The court emphasized that the
    alleged omission of information could not be shown because none of the proposed class
    representatives had reviewed the contracts. The court indicated it would reconsider
    6
    whether reliance was required for the “unlawful” prong of the UCL and directed the
    plaintiffs to provide a list of possible replacement class representatives.3
    In response to the January 26, 2011 order plaintiffs filed a brief arguing reliance
    should not be required for a claim under the unlawful prong of the UCL based on
    EquiTrust’s alleged violation of section 10127.13. Because this section is a remedial
    statute, the plaintiffs argued, noncompliance alone should establish a violation. As
    plaintiffs explained, inserting a reliance requirement in this setting would subvert the
    purpose of the law and encourage rather than “‘suppress the mischief at which [the
    statute] is directed.’” (Rand v. American Nat. Ins. Co. (N.D.Cal. 2010) 
    717 F. Supp. 2d 948
    , 957 (Rand).) The court rejected the argument, concluding the Supreme Court’s
    decisions in In re Tobacco II Cases (2009) 
    46 Cal. 4th 298
    (Tobacco II) and Kwikset
    Corp. v. Superior Court (2011) 
    51 Cal. 4th 310
    (Kwikset) require a showing of reliance to
    state a claim under the unlawful prong of the UCL.
    Plaintiffs continued their efforts to identify a class representative for the senior
    class by filing a fourth amended complaint, which added Young as a plaintiff and senior
    class representative for the breach of contract and UCL classes. They again sought to
    amend the complaint to add Gilbert as a senior class representative. The court agreed to
    add both Young and Gilbert as representatives for the breach of the implied covenant
    claim but refused to add them as class representatives for the declaratory relief claim
    because they had previously surrendered their policies. The court also denied plaintiffs’
    request for reconsideration of the reliance requirement on the unlawful prong of the UCL
    in light of an intervening decision from this district, Medrazo v. Honda of North
    Hollywood (2012) 
    205 Cal. App. 4th 1
    (Medrazo), which held reliance was not an element
    of the claim.
    In February 2013 EquiTrust moved for summary adjudication of the certified
    claims for breach of contract and breach of the implied covenant of good faith and fair
    3
    Pursuant to this order the parties stipulated to a notice that was sent to senior
    policy holders seeking additional class representatives.
    7
    dealing. EquiTrust asserted the claim, however it was characterized, failed because the
    plaintiffs could not demonstrate an underlying breach of contract.
    In May 2013, pending the hearing on the motion for summary adjudication,
    plaintiffs filed a renewed motion to certify their fraud and UCL causes of action and to
    clarify the previous class certification order as to whether the court had certified a claim
    for breach of the express promise to provide a bonus. After a hearing on October 28,
    2013 the court entered an order denying the request to certify the fraud and UCL claims
    with Gilbert as a representative. The court concluded that, absent a change in
    circumstances, plaintiffs were barred from renewing their previous motion for
    certification of claims originally denied (see Safaie v. Jacuzzi Whirlpool Bath, Inc. (2011)
    
    192 Cal. App. 4th 1160
    , 1172) and their failure to seek leave to add Gilbert as a
    representative on these claims at the time she was added as a representative for the
    implied covenant class was fatal. The court also refused to allow plaintiffs “to expand
    the scope of the certified class” by proceeding on the theory that the bonus promised by
    EquiTrust (but recouped by the initial contract rates) was a breach of contract. The court
    ruled that claim had been waived by the failure to raise it in the first motion for
    certification.
    Nonetheless, in an order issued December 16, 2013 the court considered and
    rejected both contractual theories, concluding the distinction between the express breach
    of contract claim and the breach of the implied covenant was irrelevant. The bonus
    conferred by the contract was defined as a credit to the Accumulation Value, and, as
    plaintiffs conceded, EquiTrust had duly credited each of the eligible accounts with the
    amount specified in the contracts. As to plaintiffs’ theory EquiTrust breached the implied
    covenant by manipulating rates to recover the costs of the bonuses and commissions, the
    contract afforded EquiTrust the power to reset particular rates; and plaintiffs were unable
    to assert EquiTrust’s rate setting was either unfair or had violated the terms of the
    contracts at issue. The bonuses and commissions were fixed, and amortized costs
    recouped in the initial rates and caps had been fully disclosed to, and accepted by,
    plaintiffs.
    8
    At a status conference on January 28, 2014, plaintiffs asked the court to decertify
    their cause of action for declaratory relief for lack of an adequate class representative,
    leaving the breach of contract claim as the only certified cause of action.
    CONTENTIONS
    Plaintiffs contend the trial court erred as a matter of law (1) by concluding
    EquiTrust had not breached the annuity contracts or violated the implied covenant of
    good faith and fair dealing by setting rates at levels that negated its promise of bonuses
    and imposing the burden of high commissions on policyholders; and (2) by refusing to
    certify the UCL “unlawful” prong claim based on the class representatives’ failure to
    demonstrate reliance. Further, plaintiffs contend the court abused its discretion by
    refusing to allow a former annuity holder who had surrendered her contract to serve as
    the class representative for the declaratory relief claim.
    DISCUSSION
    1. Summary Adjudication Was Properly Granted on the Breach of Contract and
    Implied Covenant Claims
    a. Plaintiffs’ breach of contract claim is reviewable
    EquiTrust initially contends plaintiffs have failed to properly present any claim
    based on an express breach of contract because that claim was never certified for class
    action treatment and plaintiffs limited the issues in their notice of appeal to certified
    claims under the “death knell” doctrine. (See In re Baycol Cases I & II (2011) 
    51 Cal. 4th 751
    , 757.) As EquiTrust points out, the court’s April 2, 2010 certification order restricted
    the class contract claim to the theory that EquiTrust had breached the covenant of good
    faith and fair dealing by manipulating its rates over the life of the contract to recoup the
    bonuses credited to the annuity holders and the high commission rates paid to the selling
    agents. After the motion for summary adjudication was filed, plaintiffs sought to clarify
    the court’s order had encompassed a claim for express breach of contract, a request the
    court denied as untimely. EquiTrust asserts plaintiffs did not challenge that ruling in this
    appeal.
    9
    While it is true the court ruled the request to certify an express breach of contract
    claim was untimely, EquiTrust’s notice of motion for summary adjudication identified
    both causes of action, one for breach of contract and one for breach of the implied
    covenant of good faith and fair dealing. The notice asserted both causes of action had
    been certified by the court in its order of August 2, 2010. The court’s order granting
    EquiTrust’s motion for summary adjudication also addressed both causes of action,
    concluding the undisputed evidence established EquiTrust had performed its contractual
    obligations; the bargained-for limits on EquiTrust’s discretion had been implemented;
    and EquiTrust had exercised the discretion conferred by the contract within the scope of
    those limits. Plaintiffs appealed from this order, as well as the order denying clarification
    and the order denying certification.
    Notices of appeal, of course, are required to be liberally construed. (Cal. Rules of
    Court, rule 8.100(a)(2).) Because the parties have had an opportunity to fully brief this
    issue and in view of our obligation to review de novo the trial court’s interpretation of the
    contract for either claim, we exercise our discretion to consider whether summary
    adjudication was properly granted on the breach of contract claim, despite EquiTrust’s
    contention it was not properly certified. (See, e.g., Canaan v. Abdelnour (1985) 
    40 Cal. 3d 703
    , 722, fn. 17 [whether to apply rule of forfeiture for failure to properly raise an issue
    “‘is largely a question of the appellate court’s discretion’”], overruled on other grounds in
    Edelstein v. City and County of San Francisco (2002) 
    29 Cal. 4th 164
    , 183; Japan Line,
    Ltd. v. County of Los Angeles (1977) 
    20 Cal. 3d 180
    , 184-185 [appellate court may
    consider issue despite “obvious impropriety” in a party’s appellate procedure, provided
    the parties have had an opportunity to brief the question], revd. on other grounds (1979)
    
    441 U.S. 434
    [
    99 S. Ct. 1813
    , 
    60 L. Ed. 2d 336
    ]; Greenlake Capital, LLC v. Bingo
    Investments, LLC (2010) 
    185 Cal. App. 4th 731
    , 740, fn. 6 [“whether the letter agreement
    itself is susceptible to severance analysis is a question of law we may properly consider
    for the first time on appeal”]; Sheller v. Superior Court (2008) 
    158 Cal. App. 4th 1697
    ,
    1709 [parties permitted to raise new issues on appeal involving question of law;
    10
    “application of the forfeiture rule is not automatic; appellate courts have discretion to
    excuse such forfeiture”].)
    b.   Standards of contract interpretation
    The fundamental goal of contract interpretation is to give effect to the mutual
    intention of the parties as it existed at the time they entered into the contract. (Hartford
    Casualty Ins. Co. v. Swift Distribution, Inc. (2014) 
    59 Cal. 4th 277
    , 288; Bank of the West
    v. Superior Court (1992) 
    2 Cal. 4th 1254
    , 1264; see Civ. Code, § 1636.) That intent is
    interpreted according to objective, rather than subjective, criteria. (Wolf v. Walt Disney
    Pictures & Television (2008) 
    162 Cal. App. 4th 1107
    , 1126 (Wolf ).) When the contract is
    clear and explicit, the parties’ intent is determined solely by reference to the language of
    the agreement. (See Civ. Code, §§ 1638 [“language of a contract is to govern its
    interpretation, if the language is clear and explicit, and does not involve an absurdity”];
    1639 [“[w]hen a contract is reduced to writing, the intention of the parties is to be
    ascertained from the writing alone, if possible”].) The words are to be understood “in
    their ordinary and popular sense” (Civ. Code, § 1644), and the “whole of [the] contract is
    to be taken together, so as to give effect to every part, if reasonably practicable, each
    clause helping to interpret the other.” (Civ. Code, § 1641.)
    Although parol evidence is inadmissible to vary or contradict the clear and
    unambiguous terms of a written, integrated contract (Code Civ. Proc., § 1856, subd. (a);
    
    Wolf, supra
    , 162 Cal.App.4th at p. 1126), extrinsic evidence is admissible to interpret the
    agreement when a material term is ambiguous. (City of Hope National Medical Center v.
    Genentech, Inc. (2008) 
    43 Cal. 4th 375
    , 395; see Pacific Gas & Electric Co. v. G.W.
    Thomas Drayage & Rigging Co. (1968) 
    69 Cal. 2d 33
    , 39-40 [if extrinsic evidence reveals
    that apparently clear language in the contract is susceptible to more than one reasonable
    interpretation, it may be used to determine contracting parties’ intent]; Code Civ. Proc.,
    § 1856, subd. (g) [extrinsic evidence admissible to interpret terms of ambiguous
    agreement].) Whether an ambiguity exists is a question of law, subject to independent
    review on appeal. (Wolf v. Superior Court (2004) 
    114 Cal. App. 4th 1343
    , 1351; Winet v.
    Price (1992) 
    4 Cal. App. 4th 1159
    , 1165.)
    11
    As we explained in 
    Wolf, supra
    , 
    162 Cal. App. 4th 1107
    , when the meaning of
    words used in a contract is disputed, the trial court engages in a three-step process: “First,
    it provisionally receives any proffered extrinsic evidence that is relevant to prove a
    meaning to which the language of the instrument is reasonably susceptible. [Citations.]
    If, in light of the extrinsic evidence, the language is reasonably susceptible to the
    interpretation urged, the extrinsic evidence is then admitted to aid the court in its role in
    interpreting the contract. [Citations.] When there is no material conflict in the extrinsic
    evidence, the trial court interprets the contract as a matter of law. [Citations.] This is true
    even when conflicting inferences may be drawn from the undisputed extrinsic evidence
    [citations] or [when] extrinsic evidence renders the contract terms susceptible to more than
    one reasonable interpretation. [Citations.] If, however, there is a conflict in the extrinsic
    evidence, the factual conflict is to be resolved by the jury.” (Wolf, at pp. 1126-1127,
    fn. omitted; see Garcia v. Truck Ins. Exchange (1984) 
    36 Cal. 3d 426
    , 439 [“[i]t is solely a
    judicial function to interpret a written contract unless the interpretation turns upon the
    credibility of extrinsic evidence, even when conflicting inferences may be drawn from
    uncontroverted evidence”]; Hess v. Ford Motor Co. (2002) 
    27 Cal. 4th 516
    , 527 [same].)
    c. Plaintiffs failed to establish a breach of contract by EquiTrust
    Plaintiffs’ breach of contract argument is straightforward: They contend the word
    “bonus” should be understood in its “ordinary and popular sense.” (Civ. Code, § 1644;
    see Reilly v. Inquest Technology, Inc. (2013) 
    218 Cal. App. 4th 536
    , 554.) Plaintiffs were
    promised a bonus they did not receive because the so-called bonus payments were
    recouped by EquiTrust through lower index credits on those annuities. In other words,
    the higher the bonus percentage, the lower the return over time. At minimum, they argue,
    the term “bonus” is ambiguous, and a triable issue of material fact that cannot be resolved
    on summary judgment exists as to whether EquiTrust breached the terms of the annuity
    contracts.
    As the trial court pointed out, however, Civil Code section 1644 contains a crucial
    caveat: “The words of a contract are to be understood in their ordinary and popular
    sense, rather than according to their strict legal meaning; unless used by the parties in a
    12
    technical sense . . . in which case the latter must be followed.’” (Italics added.) The
    court observed, “the question is not, as Plaintiffs suggest, whether EquiTrust provided
    class members with ‘a true bonus’ as a layperson would understand it, but whether
    EquiTrust provided a ‘Premium Bonus’ as defined in the contract.” As defined, the court
    concluded, there is no ambiguity in the contract and thus no basis for the admission of
    extrinsic evidence as to the contract’s meaning.
    This ruling was correct. The integrated contract identifies a premium bonus that is
    defined only with reference to the annuity’s Accumulation Value. The purchasers received
    the premium bonuses promised in the contracts. That the individual annuities varied in
    ultimate credit accumulation based on whether a particular annuity included an upfront
    premium bonus or lower credits over time does not constitute a breach of contract; to the
    contrary, the rates were disclosed, as was the range of discretion afforded to EquiTrust by
    the contract. The perception by some purchasers they would receive a 10 percent bonus
    (with no cost to them or tradeoff in the promised return credits) reflects more than anything
    the lack of sophistication of those purchasers and their vulnerability to misleading sales
    tactics. It does not, however, give rise to a contract claim and, indeed, is inadmissible to
    vary the express language of the contract. (See 
    Wolf, supra
    , 162 Cal.App.4th at pp. 1126-
    1127; see also Cirzoveto v. AIG Annuity Ins. Co. (W.D.Tenn. 2009) 
    625 F. Supp. 2d 623
    ,
    627 [granting summary judgment to insurer on breach of contract claim based on promise
    of “bonus”; terms of policy were clear and unambiguous]; Phillips v. American
    International Group, Inc. (S.D.N.Y. 2007) 
    498 F. Supp. 2d 690
    , 694-695 [rejecting
    contention word “bonus” barred insurer from altering interest rates to recoup bonus so
    long as rates complied with minimum rates contained in contract].)
    The extrinsic evidence cited by the plaintiffs, moreover, does not in any way
    support a contention the contract’s use of the word “bonus” was reasonably susceptible to
    the meaning they propose. Noel Abkemeier, who helped design the annuity for an
    actuarial company retained by EquiTrust, essentially testified the bonus products were
    designed with intrinsically lower rates in order to recover the upfront costs of the bonus:
    13
    “There’s a tradeoff over a time horizon.”4 This testimony is inherently consistent with
    the language of the contract. (Cf. Eller v. EquiTrust Life Ins. Co. (9th Cir. 2015)
    
    778 F.3d 1089
    , 1093 (Eller) [finding no duty to disclose to purchaser that annuity “may
    provide lower index credits than might have been available in an alternative product
    without the bonus feature”].)5
    Accordingly, summary adjudication in favor of EquiTrust on the plaintiffs’ breach
    of contract claim was proper.
    d. There was no breach of the implied covenant of good faith and fair dealing
    as a matter of law
    California law recognizes in every contract, including insurance policies, an
    implied covenant of good faith and fair dealing. (Wilson v. 21st Century Ins. Co. (2007)
    
    42 Cal. 4th 713
    , 720; Gruenberg v. Aetna Ins. Co. (1973) 
    9 Cal. 3d 566
    , 575.) In the
    insurance context the implied covenant requires the insurer to refrain from injuring its
    4
    EquiTrust objected to this testimony as inadmissible, and the court sustained the
    objection. Plaintiffs did not appeal the ruling. Nonetheless, it is relevant to our de novo
    determination of ambiguity. (See Cline v. Homuth (2015) 
    235 Cal. App. 4th 699
    , 705-706
    [“‘[E]ven if the trial court personally finds the document not to be ambiguous, it should
    preliminarily consider all credible evidence to ascertain the intent of the parties. “The
    test of whether parol evidence is admissible to construe an ambiguity is not whether the
    language appears to the court to be unambiguous, but whether the evidence presented is
    relevant to prove a meaning to which the language is ‘reasonably susceptible.’”’”];
    accord, 
    Wolf, supra
    , 162 Cal.App.4th at pp. 1126-1127.)
    5
    In 
    Eller, supra
    , 
    778 F.3d 1089
    plaintiff Harrington alleged EquiTrust’s marketing
    of its MarketPower Bonus Index annuity violated the Racketeer Influenced and Corrupt
    Organizations Act (18 U.S.C. § 1962(c) (RICO)), as well as Arizona law. In rejecting the
    RICO claim, the court stated: “[I]t is uncontested here that EquiTrust delivered precisely
    what it promised. The 10% bonus was accurately described in the Annuity materials and
    properly credited to Harrington’s account. The bonus increased Harrington’s
    accumulation value without requiring him to deposit additional funds, allowing him to
    withdraw more money without penalty than otherwise would have been possible. The
    promise of a ‘bonus’ was thus not, as Harrington claims, illusory. [Citation.] Nor is it
    clear that Harrington would have been better off absent the bonus feature. If the index
    credits were regularly low, Harrington’s investment would outperform a non-bonus
    annuity that provided the possibility of higher credits. The district court thus correctly
    concluded that use of the term ‘bonus’ was not fraudulent.” (Eller, at pp. 1093-1094,
    fn. omitted.)
    14
    insured’s right to receive the benefits of the insurance agreement. (Egan v. Mutual of
    Omaha Ins. Co. (1979) 
    24 Cal. 3d 809
    , 818.) “[T]he covenant is implied as a supplement
    to the express contractual covenants, to prevent a contracting party from engaging in
    conduct that frustrates the other party’s rights to the benefits of the agreement.” (Waller
    v. Truck Ins. Exchange, Inc. (1995) 
    11 Cal. 4th 1
    , 36; see Carma Developers (Cal.), Inc.
    v. Marathon Development California, Inc. (1992) 
    2 Cal. 4th 342
    , 372 [“the covenant
    requires the party holding such [discretionary] power to exercise it ‘for any purpose
    within the reasonable contemplation of the parties at the time of formation—to capture
    opportunities that were preserved upon entering the contract interpreted objectively’”].)
    As a general rule, as the trial court recognized, there can be no breach of the
    implied covenant of good faith and fair dealing if no benefits are due under the policy or
    contract: “[T]he covenant is based on the contractual relationship between the insured and
    the insurer. . . . Absent that contractual right [to policy benefits], the implied covenant has
    nothing upon which to act as a supplement, and ‘should not be endowed with an existence
    independent of its contractual underpinnings.’” (Waller v. Truck Ins. Exchange, 
    Inc., supra
    , 11 Cal.4th at p. 36; accord, Brandwein v. Butler (2013) 
    218 Cal. App. 4th 1485
    ,
    1514-1515; Brehm v. 21st Century Ins. Co. (2008) 
    166 Cal. App. 4th 1225
    , 1235-1237;
    Progressive West Ins. Co. v. Superior Court (2005) 
    135 Cal. App. 4th 263
    , 279.)6 “[T]he
    implied covenant will only be recognized to further the contract’s purpose; it will not be
    read into a contract to prohibit a party from doing that which is expressly permitted by the
    agreement itself.” (
    Wolf, supra
    , 162 Cal.App.4th at p. 1120.) “Thus, although it has been
    said the implied covenant finds ‘particular application in situations where one party is
    invested with a discretionary power affecting the rights of another’ [citations], if the
    express purpose of the contract is to grant unfettered discretion, and the contract is
    6
    Breach of a specific provision of the contract, however, is not a necessary
    prerequisite to a claim for breach of the implied covenant of good faith and fair dealing.
    (See Carma Developers (Cal.), Inc. v. Marathon Development California, 
    Inc, supra
    ,
    2 Cal.4th at p. 373; Brehm v. 21st Century Ins. 
    Co., supra
    , 166 Cal.App.4th at pp. 1235-
    1236.)
    15
    otherwise supported by adequate consideration, then the conduct is, by definition, within
    the reasonable expectation of the parties and ‘can never violate an implied covenant of
    good faith and fair dealing.’” (Id. at pp. 1120-1121; see also Third Story Music, Inc. v.
    Waits (1995) 
    41 Cal. App. 4th 798
    , 808 [“courts are not at liberty to imply a covenant
    directly at odds with a contract’s express grant of discretionary power except in those
    relatively rare instances when reading the provision literally would, contrary to the
    parties’ clear intention, result in an unenforceable, illusory agreement”].)
    Relying on this court’s decision in April Enterprises, Inc. v. KTTV (1983)
    
    147 Cal. App. 3d 805
    , the plaintiffs contend EquiTrust’s discretion was not unfettered and
    its failure to ensure that credited returns fulfilled their reasonable expectations of the
    benefit of the bonuses they were promised breached the covenant of good faith and fair
    dealing. In April Enterprises plaintiff, a ventriloquist, entered into a contract with a
    television station to produce a television show based on the characters he had created.
    The contract gave both parties the right to enter into syndication deals with third parties,
    with half the profits going to the other party. Under the contract, however, the station
    owned the show videotapes and was authorized to erase the tapes of each show six
    months after initial broadcast. (Id. at p. 814.) Some years after the contract was signed,
    the station erased the only copies of the programs; and the ventriloquist sued. Reversing
    a nonsuit judgment in favor of the station, this court held, because the contract contained
    conflicting terms, the station’s discretion to erase the tapes had to be construed as limited
    by the covenant of good faith and fair dealing to allow erasure only when future
    syndication was not feasible. (Id. at pp. 816-817.)
    As EquiTrust argues, April Enterprises is not apposite because the annuity
    contracts do not contain unclear or conflicting terms. The contracts specify the initial
    premium bonuses and guaranteed minimums bargained for by plaintiffs. There is no
    evidence EquiTrust violated these terms or subsequently manipulated renewal rates to
    deprive annuitants of credits due under the initial terms of the contracts. The evidence
    instead supports the conclusion the trial court reached, that is, EquiTrust complied with
    the rates specified in the contracts and exercised its discretion to set renewal rates and
    16
    caps consistently with those terms. In this respect, the credited returns were calculated
    within the parameters of the costs to EquiTrust of each annuity; for those annuities
    conferring a premium bonus—at a higher initial cost to the insurer—EquiTrust was
    required to hedge, or protect, its investment exposure by offering lower initial caps that
    adversely affected credit accumulation for the purchaser. Nothing in the contracts
    prohibited this approach; indeed, the contracts expressly contemplated this distinction in
    rates and, ultimately, credited returns.
    Again, the wrong complained of by plaintiffs, the inducement to purchase the
    annuity contracts with the promise of a bonus that, in practice, does not accumulate to the
    ultimate good of the purchaser, sounds in actionable misrepresentation. (See 
    Eller, supra
    , 778 F.3d at p. 1093.) It does not support a cause of action for breach of contract
    or the implied covenant of good faith and fair dealing when the insurer provides all that is
    promised by the contract.
    2. The Trial Court Did Not Err in Refusing To Certify Plaintiffs’ UCL Unlawful
    Prong Cause of Action
    a. Plaintiffs have adequately preserved this issue on appeal
    EquiTrust contends plaintiffs have forfeited the issue whether the trial court erred
    as a matter of law in refusing to certify the UCL cause of action due to an absence of
    reliance because they failed to propose an alternative class representative after Taylor
    was found to be inadequate. (See Lafferty v. Wells Fargo Bank (2013) 
    213 Cal. App. 4th 545
    , 571-572 [failure to address alternative grounds for ruling forfeits appellate challenge
    to ruling].) Plaintiffs respond they repeatedly challenged the trial court’s ruling that
    reliance was required and proposal of another class representative who could not
    demonstrate reliance would have been futile. (See Phillips v. Sprint PCS (2012)
    
    209 Cal. App. 4th 758
    , 773 [“‘[w]aiver should not be found on the basis of a party’s failure
    to undertake a futile act’”].)
    The record does not support the finding of forfeiture requested by EquiTrust.
    Plaintiffs advised EquiTrust and the court at the time they sought leave to file the fourth
    amended complaint that the newly proposed class representatives would not be able to
    17
    testify they had relied on EquiTrust’s alleged violation of section 10127.13, “as
    delineated by the Court at the July 6, 2011 hearing.” The court never altered its position
    that a showing of reliance was required to state a claim under the UCL’s unlawful prong.
    Consequently, no alternative class representatives were proposed for that particular class.
    Amendments to add proper class representatives are routinely permitted. For
    example, in Branick v. Downey Savings & Loan Assn. (2006) 
    39 Cal. 4th 235
    the Supreme
    Court rejected defendants’ argument plaintiffs should not be permitted to name a new
    class representative when the failure to do so in the initial complaint was not a mistake.
    As the Court stated, “No such rule exists. To the contrary, courts have permitted
    plaintiffs who have been determined to lack standing, or who have lost standing after the
    complaint was filed, to substitute as plaintiffs the true real parties in interest. [Citations.]
    Amendments for this purpose are liberally allowed.” (Id. at p. 243; accord, Troyk v.
    Farmers Group, Inc. (2009) 
    171 Cal. App. 4th 1305
    , 1351, fn. 35 (Troyk); CashCall, Inc.
    v. Superior Court (2008) 
    159 Cal. App. 4th 273
    , 288.) We see no reason why this general
    rule does not apply in this instance.
    b. The MVA notice on the policies did not comply with section 10127.13
    Plaintiffs premise their remaining claims on the contention the MVA was not
    properly disclosed as a surrender charge on the cover page of the annuities sold by
    EquiTrust to persons age 60 or older in violation of section 10127.13. At the time these
    policies were sold, section 10127.13 provided: “All individual life insurance policies and
    individual annuity contracts for senior citizens that contain a surrender charge period
    shall either disclose the surrender period and all associated penalties in 12-point bold
    print on the cover sheet of the policy or disclose the location of the surrender information
    in bold 12-point print on the cover page of the policy, or printed on a sticker that is
    affixed to the cover page or to the policy jacket. . . .” (Stats. 1994, ch. 984, § 4, p. 5732.)7
    7
    Former section 10127.13 was repealed effective July 1, 2015 and replaced with a
    new section 10127.13, which provides: “(a) All individual life insurance policies and
    individual annuity contracts for senior citizens that contain a charge upon surrender,
    partial surrender, excess withdrawal, or penalties upon surrender shall contain a notice
    18
    The existence of surrender charges is disclosed on the cover page of the annuities
    sold by EquiTrust and, as permitted by section 10127.13, described in full on the
    “Contract Date Page” found after the annuity’s table of contents. In addition to this
    notice, each policy contains a second advisory in a separate paragraph on the cover page.
    The notice states, in bold capital letters set in what appears to be a 10-point font, “CASH
    SURRENDER VALUES MAY INCREASE OR DECREASE BASED ON THE
    EQUITY INDEX AND MARKET VALUE ADJUSTMENT FEATURES OF THIS
    CONTRACT.” The cover page does not identify the MVA as a surrender charge or
    disclose how the MVA operates. Indeed, EquiTrust acknowledges it did not consider the
    MVA to be a surrender charge and did not attempt to comply with section 10127.13 in
    posting this notice. (See 
    Eller, supra
    , 778 F.3d at p. 1094 [the MVA is designed to take
    into account “the capital gains or losses resulting from the sale of securities needed to
    fund early withdrawal or surrender requests”].) Nevertheless, EquiTrust contends it
    substantially complied with the purpose and mandate of section 10127.13.
    The sole published decision addressing whether a notice of surrender charges on
    the cover of an indexed annuity policy must disclose the policy’s MVA is 
    Rand, supra
    ,
    
    717 F. Supp. 2d 948
    . There, an 86-year-old woman purchased two separate annuities from
    the same company, neither of which would mature until 2025, when she reached the age
    of 106. (Id. at p. 950.) Three years later her conservator surrendered one of the policies,8
    and a surrender charge and MVA were assessed, reducing the amount returned. (Ibid.)
    disclosing the location of the charge, the charge time period, the charge information, and
    any associated penalty information, in bold 12-point print on the front of the policy jacket
    or on the cover page of the policy. [¶] (b) A policy shall have just one cover page. If
    the notice required by this section and the statutorily required right to examine notice are
    both on the cover page, as opposed to the front cover of the policy jacket, they shall
    appear on the same page. [¶] (c) General references to ‘policy’ in this section refer to
    both life insurance policies and annuity contracts. [¶] (d) This section shall become
    operative on July 1, 2015.” Plaintiffs’ request that we take judicial notice of two items
    from the legislative history of the current version of section 10127.13 is granted.
    8
    Upon Rand’s death, the second policy paid a death benefit to her beneficiary, the
    proceeds of which were also reduced by a surrender charge.
    19
    Rand’s estate sued, alleging the defendant insurer had violated the UCL in part by failing
    to comply with section 10127.13. According to Rand, the MVA, which was not
    mentioned on the cover page of the policy but was described instead in a section of the
    policy entitled “Premiums and Cash Value Strategies,” should have been disclosed on the
    cover page as a penalty associated with surrender of the policy. (Id. at pp. 953-954.)
    The district court agreed, finding that “Section 10127.13 is not limited to those
    penalties that [the insurer] chooses to label as a ‘surrender charge.’ . . . Rather than
    simply requiring disclosure of ‘all surrender charges,’ the statute requires disclosure of
    ‘all’ ‘penalties’ ‘associated’ with the surrender period, which is broader than simply
    requiring disclosure of surrender charges. . . . The MVA operates as a penalty because it
    reduces or forfeits a portion of the [policy] account value in connection with any early
    surrender that exceeds the penalty-free amount. The MVA . . . is ‘associated’ with the
    surrender period because the MVA applies only during the surrender period stated in the
    contract.” (
    Rand, supra
    , 717 F.Supp.2d at p. 956.)
    While the Rand holding appears to be correct, EquiTrust’s annuity cover page is
    fundamentally different from the one considered in that case. Here, the cover page of the
    policies contained an advisory expressly warning purchasers that “cash surrender values
    may increase or decrease based on the equity index and the market value adjustment
    features of this contract.” (Italics added.) This language advises a purchaser that the
    MVA may operate as a penalty upon surrender of the policy. The cover page of the
    policy in Rand contained no such information.
    Plaintiffs argue that, as a remedial statute, section 10127.13 must be adhered to
    strictly and that substantial compliance is insufficient when a statute mandates disclosure
    of consumer information. Indeed, the Rand court rejected the insurer’s argument it had
    substantially complied with section 10127.13: “‘[T]he doctrine of substantial compliance
    does not apply at all when a statute’s requirements are mandatory, instead of merely
    directory.’” (
    Rand, supra
    , 717 F.Supp.2d at p. 961, quoting 
    Troyk, supra
    ,
    171 Cal.App.4th at p. 1333.) In Troyk the Court of Appeal similarly rejected an insurer’s
    argument it had substantially complied with the disclosure obligations of Insurance Code
    20
    section 381, which requires an insurance policy to state the premium charged for
    insurance coverage. As the Troyk court explained, “‘“Substantial compliance, as the
    phrase is used in the decisions, means actual compliance in respect to the substance
    essential to every reasonable objective of the statute.” [Citation.] Where there is
    compliance as to all matters of substance[,] technical deviations are not to be given the
    stature of noncompliance. [Citation.] Substance prevails over form. When the plaintiff
    embarks [on a course of substantial compliance], every reasonable objective of [the
    statute at issue] has been satisfied.’ [Citation.] ‘Thus, the doctrine gives effect to our
    preference for substance over form, but it does not allow for an excuse to literal
    noncompliance in every situation.’ [Citation.] Furthermore, the doctrine of substantial
    compliance does not apply at all when a statute’s requirements are mandatory, instead of
    merely directory. [Citations.] A mandatory statute ‘is one that is essential to the
    promotion of the overall statutory design and thus does not permit substantial
    compliance.’” (Troyk, at pp. 1332-1333.) “Were insurers allowed, by substantial
    compliance or otherwise, to state all or part of a premium in documents other than a
    policy, those underlying purposes of section 381, subdivision (f), would not be promoted.
    Because section 381, subdivision (f)’s disclosure requirement is essential to the overall
    promotion of the statutory design, we conclude that statute’s disclosure requirement is
    mandatory.” (Id. at p. 1333.)
    Like the premium disclosure requirement at issue in Troyk, we agree that
    disclosure of the MVA’s potential impact on surrender charges is “essential to the overall
    promotion of the statutory design,” that is, to alert seniors to the adverse consequences of
    surrendering their policies before maturity, and is thus mandatory within the meaning of
    Troyk. While section 10127.13’s purpose has been substantially accomplished by the
    disclosure of the potential effect of the MVA on the cover of the policy in eminently
    readable form (see Costa v. Superior Court (2006) 
    37 Cal. 4th 986
    , 1026 [“courts have
    taken a realistic and practical view of the consequence of relatively minor statutory
    lapses, refusing, for example, to withhold a measure from the ballot because of the
    theoretical possibility that a smaller type size in a title might have affected potential
    21
    signers when the actual type size utilized was not unduly small and was clearly
    readable”]; Assembly v. Deukmejian (1982) 
    30 Cal. 3d 638
    , 652 [“technical deficiencies in
    referendum and initiative petitions will not invalidate the petitions if they are in
    ‘substantial compliance’ with statutory and constitutional requirements”]), the failure to
    present the notice in the mandated 12-point font is not its only defect. As might be
    expected in light of EquiTrust’s assertion the MVA does not constitute a true surrender
    charge, the notice does not advise a senior purchaser of those circumstances in which the
    MVA will impose a surrender penalty or identify where in the policy that information
    may be found, as required by section 10127.13. In fact, very little information is
    provided in the policy other than the formula used to calculate the MVA, which is set
    forth in the general definitions (rather than on the contract data page) and is identified as
    (1 + s) / (1 + c + 0.005)n/12, where s is the starting Treasury Rate, c is the Treasury Rate
    for the remaining period at withdrawal or surrender and n is the number of complete
    months until the end of the surrender period.
    EquiTrust points out that this algebraic formula is unlikely to mean anything to the
    average—or even educated—purchaser, and disclosure of the formula’s effect is more
    than sufficient. This argument is belied, however, by EquiTrust’s own description of the
    MVA in disclosures provided to agents to review with purchasers at the point of sale. The
    information contained in EquiTrust’s single-page disclosure identifies the MVA formula
    as [(1 + s) / (1 + c + 0.005)] n/12 - 1 (emphasis added; the - 1 is omitted in the policy’s
    version of the formula)9 and gives detailed examples of its operation, including instances
    in which it would increase the surrender charge. This information could have been
    included on the contract data page, and the mandate of the statute would have been met.
    9
    The discrepancy between the two versions of the formula is not explained in the
    record; but EquiTrust filed a post-argument letter brief demonstrating the two different
    formulas, when properly understood and applied, yield identical results. Plainly,
    however, the discrepancy undermines any argument the policy cover page complies with
    section 10127.13’s statutory mandate.
    22
    c. Plaintiffs failed to satisfy the standing requirement applicable to their UCL
    cause of action
    The UCL prohibits, and provides civil remedies for, unfair competition, which it
    defines as “any unlawful, unfair or fraudulent business act or practice.” (Bus. & Prof.
    Code, § 17200.) In 2004 California voters “materially curtailed the universe of those
    who may enforce” the UCL by enacting Proposition 64. 
    (Kwikset, supra
    , 51 Cal.4th at
    p. 320.) Proposition 64 limited private standing under the UCL to any “‘“person who has
    suffered injury in fact and has lost money or property”’ as a result of unfair competition.”
    (Kwikset, at pp. 20-321., quoting Bus. & Prof. Code, § 17204.) “‘The phrase “as a result
    of’ in its plain and ordinary sense means “caused by” and requires a showing of causal
    connection or reliance. . . .’” (Id. at p. 326.) Thus, in order to pursue a claim under the
    UCL, a plaintiff must “(1) establish a loss or deprivation of money or property sufficient
    to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury
    was the result of, i.e., caused by, the unfair business practice . . . that is the gravamen of
    the claim.” (Kwikset, at p. 322; accord, Sarun v. Dignity Health (2014) 
    232 Cal. App. 4th 1159
    , 1166.)
    The question presented here is whether, absent an allegation she read the policy
    cover page, any of the senior plaintiffs could represent the proposed class on the claim
    EquiTrust’s policy violated the requirements of section 10127.13.10 The trial court
    concluded they could not. We agree.
    10
    In Tobacco 
    II, supra
    , 
    46 Cal. 4th 298
    the Supreme Court addressed the impact of
    Proposition 64’s standing requirement on UCL class actions. Tobacco II involved a class
    action brought by smokers against the tobacco companies alleging the companies’
    marketing and advertising violated the UCL. After Proposition 64 was enacted, the trial
    court decertified the class, finding that each absent class member was now required to
    show they suffered an injury in fact as a result of the alleged unfair competition. (Id. at
    p. 306.) Reversing the decertification order, the Supreme Court held that Proposition 64
    “was not intended to, and does not, impose [Business and Professions Code] section
    17204’s standing requirements on absent class members in a UCL class action where
    class requirements have otherwise been found to exist.” (Id. at p. 324.) Thus, “relief
    under the UCL is available [to absent class members] without individualized proof of
    deception, reliance and injury” so long as the class representative meets Proposition 64
    23
    In Tobacco II the Court emphasized that its “discussion of causation in this case is
    limited to such cases where, as here, a UCL action is based on a fraud theory involving
    false advertising and misrepresentations to consumers. . . . There are doubtless many
    types of unfair business practices in which the concept of reliance, as discussed here, has
    no application.” (Tobacco 
    II, supra
    , 46 Cal.4th at p. 325, fn. 17.) In 
    Kwikset, supra
    ,
    
    51 Cal. 4th 310
    the Court extended the reasoning of Tobacco II to claims brought under the
    unlawful prong when the alleged unlawful conduct is that the defendant engaged in
    misrepresentations and deception. (Kwikset, at p. 326, fn. 9, citing Durell v. Sharp
    Healthcare (2010) 
    183 Cal. App. 4th 1350
    , 1363; accord, Hale v. Sharp Healthcare (2010)
    
    183 Cal. App. 4th 1373
    , 1385.) As the Durell court explained, “[a] consumer’s burden of
    pleading causation in a UCL action should hinge on the nature of the alleged wrongdoing
    rather than the specific prong of the UCL the consumer invokes.” (Durell, at p. 1363.)
    Plaintiffs contend that neither Tobacco II nor Kwikset requires a showing of
    reliance here and urge us to follow the decision in 
    Medrazo, supra
    , 
    205 Cal. App. 4th 1
    .
    There, the plaintiff sued a motorcycle dealer under the UCL, alleging it had violated
    provisions of the Vehicle Code forbidding the sale of motorcycles without hanger tags
    providing specified pricing information. (Medrazo, at pp. 4-5.) Although the pricing
    information was ultimately disclosed to the purchaser once she decided to buy the
    motorcycle, the motorcycle she bought had not been outfitted with the required tag. (Id. at
    pp. 7-8.) The trial court concluded the plaintiff lacked standing to sue under the unlawful
    prong because she failed to demonstrate she had relied on the tag in making the decision
    to purchase the motorcycle. (Id. at p. 9.)
    Division Four of this court reversed. The court concluded the plaintiff had
    suffered “a concrete, particularized, and actual invasion of an interest legally protected by
    [the Vehicle Code], i.e., the disclosure—before a decision to purchase a specific
    motorcycle is made —of the MSRP and any dealer-added charges for all new
    standing requirements. (Id. at p. 320, see also 
    Medrazo, supra
    , 205 Cal.App.4th at p. 11
    [“[w]hen the private action is brought as a class action, only the named plaintiff is
    required to meet this standing requirement”].)
    24
    motorcycles offered for sale.” (
    Medrazo, supra
    , 205 Cal.App.4th at p. 13.) As the court
    observed, the statute was “‘designed to provide . . . motorcycle buyers with information
    that is necessary to make a wise purchase.’” (Ibid.) The absence of the tag deprived the
    purchaser of information the Legislature had deemed necessary for an informed
    purchasing decision.
    Although Medrazo has been criticized for reaching beyond the four corners of
    Tobacco II and Kwikset (see, e.g., Kane v. Chobani, Inc. (N.D. Cal. 2014) 
    973 F. Supp. 2d 1120
    , 1131), we believe it was correctly decided based on the specific facts presented,
    which constituted one of the “types of unfair business practices in which the concept of
    reliance. . . has no application” envisioned by the Supreme Court in Tobacco II. (See
    Tobacco 
    II, supra
    , 46 Cal.4th at p. 325, fn. 17.) Medrazo’s injury was caused by the
    absence of the tag, and she had no opportunity to review the information a tag would
    have conveyed before she decided to buy that particular motorcycle. As plaintiffs have
    argued, inserting a reliance requirement in this setting would have subverted the purpose
    of the law and encourage rather than “‘suppress the mischief at which [the statute] is
    directed.’” (
    Rand, supra
    , 717 F.Supp.2d at p. 957.)
    The same situation does not exist here, however. In what is almost the reverse of
    the facts in Medrazo, the plaintiffs here were shown a comprehensive notice disclosing
    the existence and operation of the MVA before they made the decision to purchase an
    EquiTrust annuity. After the purchase was completed, each received a copy of the
    policy, which contained the defective cover page advising she had 30 days to rescind.
    Not one of the plaintiffs was able to assert she had reviewed the cover page when given
    the opportunity. In this instance the absence of the necessary information was irrelevant
    to the decision to purchase the selected policy. These facts more closely resemble those
    in 
    Durell, supra
    , 
    183 Cal. App. 4th 1350
    in which the court affirmed dismissal of the
    plaintiff’s UCL claim when the plaintiff could not allege he had ever visited the
    defendant’s website and read the alleged misrepresentation. (Durell, at p. 1363; see also
    Jenkins v. JPMorgan Chase Bank, N.A. (2013) 
    216 Cal. App. 4th 497
    , 523 [rejecting UCL
    standing of plaintiff whose foreclosure was not triggered by alleged unlawful acts].) As
    25
    one court succinctly stated, “[a] plaintiff fails to satisfy the causation prong of the statute
    if he or she would have suffered ‘the same harm whether or not a defendant complied
    with the law.’” (Daro v. Superior Court (2007) 
    151 Cal. App. 4th 1079
    , 1099.) Plaintiffs
    have failed this crucial test.
    In reaching this conclusion, we do not condone marketing tactics that appear to
    have generated sales of indexed annuities to unsuitable clients. Nonetheless, the trial
    court did not err in finding plaintiffs’ failure to allege they had reviewed the defective
    notices barred their claim under the UCL.
    3. The Declaratory Relief Cause of Action Also Fails
    Declaratory relief is available to “[a]ny person interested under a written
    instrument . . . who desires a declaration of his or her rights or duties with respect to
    another, or in respect to, in, over or upon property . . . in cases of actual controversy
    relating to the legal rights and duties of the respective parties. . . .” (Code Civ. Proc.,
    § 1060; Maguire v. Hibernia S. & L. Soc. (1944) 
    23 Cal. 2d 719
    , 728 [“[a] complaint for
    declaratory relief is legally sufficient if it sets forth facts showing the existence of an
    actual controversy relating to the legal rights and duties of the respective parties under a
    written instrument and requests that these rights and duties be adjudged by the court”];
    accord, Graham v. Bank of America, N.A. (2014) 
    226 Cal. App. 4th 594
    , 615.) In light of
    our conclusion EquiTrust did not breach the provisions of its policies, there is no actual
    controversy warranting our intervention.
    DISPOSITION
    The orders of the trial court are affirmed. EquiTrust is to recover its costs on
    appeal.
    PERLUSS, P. J.
    We concur:
    ZELON, J.                                   SEGAL, J.
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