Villanueva v. Fidelity National Title Company

IN THE SUPREME COURT OF
CALIFORNIA
MANNY VILLANUEVA et al.,
Plaintiffs and Appellants,
v.
FIDELITY NATIONAL TITLE COMPANY,
Defendant and Appellant.
S252035
Sixth Appellate District
H041870 and H042504
Santa Clara County Superior Court
1-10-CV173356
March 18, 2021
Justice Kruger authored the opinion of the Court, in which
Chief Justice Cantil-Sakauye and Justices Corrigan, Liu,
Cuéllar, Groban, and Jenkins concurred.
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
S252035
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.
1
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
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
1
“The UCL prohibits, and provides civil remedies for, unfair
competition, which it defines as ‘any unlawful, unfair or
fraudulent business act or practice.’ [Citation.] Its purpose ‘is
to protect both consumers and competitors by promoting fair
competition in commercial markets for goods and services.’ ”
(Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 320.)
2
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
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.) 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 (Quelimane), the Court of Appeal reasoned
that immunity under the statute extends to all “ ‘ratemaking-
2
The trial court’s ruling denying restitution is not before
us, and we express no views concerning its correctness.
3
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
related activities,’ ” a category that includes the charging of
unfiled rates. (Villanueva, at p. 1124, quoting Quelimane, at
p. 46.) 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.)
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; 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.) 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; Siegel v.
Fidelity Nat. Title Ins. Co. (1996) 46 Cal.App.4th 1181, 1191.) 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.)
Title insurance differs in some respects from other forms
of insurance. While most other forms of insurance provide
4
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
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; King v. Stanley (1948)
32 Cal.2d 584, 590.) 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)
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.) 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 insurers to file a
schedule of their rates with the Commissioner. (Ins. Code,
§ 12401.1.) The filing requirement extends to any rate imposed
as part of “the business of title insurance” (id., § 12401.7), which
5
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
includes “any service in conjunction with the issuance . . . of a
title policy including but not limited to the handling of any
escrow, settlement or closing in connection therewith” (id.,
§ 12340.3, subd. (c)).3 Once rates are filed, regulated entities are
required to wait 30 days before using them. (Ins. Code,
§§ 12401.1, 12401.7.) This regulatory approach — commonly
known as “file and use” — allows entities to implement their
filed rates without the need for formal prior approval. (See
McCray v. Fidelity Nat. Title Ins. Co. (D.Del. 2009) 636
F.Supp.2d 322, 325 [in a “ ‘file and use’ state . . . the insurers file
their rates with the [Department of Insurance] and begin to
charge them after the effective date stated in their filings,
unless the Commissioner disapproves the rates”]; Quiner, Title
Insurance and the Title Insurance Industry (1973) 22 Drake
L.Rev. 711, 724.)
The Legislature first established this system of title
insurance rate regulation in 1973. Although voters would later
require the Commissioner to affirmatively approve most other
insurance rates before they could take effect (Prop. 103, as
approved by voters, Gen. Elec. (Nov. 8, 1988); see Amwest Surety
Ins. Co. v. Wilson (1995) 11 Cal.4th 1243, 1259), they expressly
exempted title insurance from this prior-approval approach
(Ins. Code, §§ 1851, subd. (d), 1861.13). The system in place
today is thus the same file-and-use system the Legislature
originally chose in 1973.
The issue in this case concerns the remedies available to a
consumer when a title insurer uses rates that it has not filed.
Fidelity argues, and the Court of Appeal agreed, that the
3
There is an exception for “miscellaneous charges.” (Ins.
Code, § 12340.7.) This exception is not at issue here.
6
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
relevant statutory provisions leave no room for a consumer to
sue based on unfiled-rate charges — both because section
12414.26 immunizes their ratemaking from civil suit under
noninsurance laws and because administrative complaints to
the Commissioner constitute the exclusive avenue for consumer
relief. We consider each argument in turn.
III.
A.
To determine the scope of the immunity afforded by
section 12414.26, we begin, as always, with the text, which
affords the best guide to the Legislature’s intent. (See, e.g.,
McLean v. State of California (2016) 1 Cal.5th 615, 622; Tonya
M. v. Superior Court (2007) 42 Cal.4th 836, 844.) The statute
provides in full: “No act done, action taken, or agreement made
pursuant to the authority conferred by Article 5.5 (commencing
with Section 12401) or Article 5.7 (commencing with Section
12402) of this chapter shall constitute a violation of or grounds
for prosecution or civil proceedings under any other law of this
state heretofore or hereafter enacted which does not specifically
refer to insurance.” (§ 12414.26.) Villanueva argues that this
provision extends immunity only to conduct authorized by the
relevant articles and that the unfiled rates challenged here are
not authorized. Fidelity counters that the conduct here is
authorized by the referenced articles. But it also contends that
the provision in any event extends immunity beyond conduct
authorized by the relevant articles to conduct regulated by the
relevant articles.
To evaluate Fidelity’s argument that Villanueva’s suit
targets conduct authorized by articles 5.5 and 5.7, we begin by
examining what it is, precisely, that these articles authorize.
7
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Article 5.5 (Ins. Code, §§ 12401–12401.10) is the article directly
relevant here. It governs title insurance rate filing and
regulation. Among other things, article 5.5 requires title
insurers to “establish basic classifications of coverages and
services” as a basis for their rates (Ins. Code, § 12401.2; see id.,
§ 12401.3, subd. (d)) and to then file those rates with the
Commissioner (id., § 12401.1). The article forbids rates that are
excessive, inadequate, or discriminatory. (Id., § 12401.3, subd.
(a).) It generally prohibits title insurers from charging unfiled
rates or rates before their effective date, 30 days after filing.
(Id., §§ 12401.1, 12401.7; see id., §§ 12401.71, 12401.8
[specifying exceptions].) In addition, article 5.5 permits insurers
to consult with each other and with industry organizations and
share information and loss experience data (id., § 12401.4), data
that is central to the insurers’ ability to set rates (see State
Comp. Ins. Fund v. Superior Court (2001) 24 Cal.4th 930, 939
(State Fund) [“ ‘As a practical matter the business of insurance
cannot be conducted and maintained upon a sound basis unless
insurance carriers discuss and pool their experience for rate
making purposes,’ ” quoting Joint Interim Legis. Com., Rep. on
Ins. Reg., 1 Sen. J. Appen. (1947 Reg. Sess.) p. 5]). Finally, the
article permits entities under the same management to act in
concert. (Ins. Code, § 12401.6.)
Article 5.7 (Ins. Code, §§ 12402–12402.2) regulates
insurance advisory organizations, a term defined to include
entities that “collect[] and furnish[] to [their] members or
insurance supervisory officials loss and expense statistics or
other statistical information and data relating to the business of
title insurance.” (Id., § 12340.8.) Through such organizations,
insurers may obtain a much deeper pool of loss experience data
than they would otherwise have at their disposal.
8
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Fidelity argues that because article 5.5 regulates rates for
the business of title insurance, the act of charging rates —
including unfiled rates — is an act “done . . . pursuant to the
authority conferred by Article 5.5.” (§ 12414.26.) But article 5.5
is more narrowly drawn. It contemplates that title insurers
may: (1) charge a filed rate after its effective date (Ins. Code,
§§ 12401.1, 12401.7); (2) charge a filed rate before its effective
date if the new rate results in a rate reduction (id., § 12401.71,
subd. (a)); and (3) for unusual risks or services, impose
surcharges in excess of those set forth in the rate filing, provided
the surcharges are reasonable and approved in writing in
advance (id., § 12401.8). Setting aside “miscellaneous charges”
(id., § 12340.7), the imposition of any charge that does not fit
within these categories would not be authorized by article 5.5.
The rates charged here, which were never filed with the
Commissioner, do not fall into any of these categories. Far from
being authorized, they are expressly prohibited. (See Ins. Code,
§§ 12401.1, 12401.7, 12414.27.)
Fidelity’s alternative contention — that immunity extends
not just to conduct authorized by article 5.5 but also to any
matter regulated by the article — is plainly contradicted by the
language of the statute. Section 12414.26 extends immunity
only to acts done, actions taken, or agreements made “pursuant
to the authority conferred by Article 5.5 . . . or Article 5.7.”
(Italics added.) If the Legislature had wished to adopt Fidelity’s
desired approach, it could have simply written, “No matter
regulated under Article 5.5 or Article 5.7” shall be a basis for suit
under a law not specifically referencing insurance. The
Legislature instead chose to include language explicitly limiting
immunity to acts authorized by, rather than merely regulated
under, the relevant articles, and we must give effect to that
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
choice. (E.g., Tuolumne Jobs & Small Business Alliance v.
Superior Court (2014) 59 Cal.4th 1029, 1038 [when possible,
“courts should give meaning to every word of a statute”].)4
Prior cases reinforce our understanding of section
12414.26 immunity. Section 12414.26 is not the only provision
of its kind; it is one of four nearly identical immunity provisions
scattered through the Insurance Code that supplement limited
state regulation with partial immunity for specific categories of
insurance. (See Ins. Code, §§ 795.7, 1860.1, 11758, 12414.26.)
These statutes address the same class of subjects and share a
common purpose, and so their parallel language should be
construed in like fashion. (People v. Villatoro (2012) 54 Cal.4th
1152, 1161; accord, e.g., People v. Tran (2015) 61 Cal.4th 1160,
1167–1168.) Those courts that have addressed the issue have
consistently understood the language of these provisions to
immunize acts affirmatively authorized by the relevant
provisions of the Insurance Code, as opposed to acts that are
merely regulated under those provisions.
In State Fund, supra, 24 Cal.4th 930, for example, we
emphasized that by the express terms of Insurance Code section
11758, immunity extends only to acts taken and agreements
made “ ‘pursuant to the authority conferred by this article’ ”
(State Fund, at p. 936, quoting Ins. Code, § 11758, italics added
by State Fund), not to any act taken or agreement made
4
Limiting the immunity conveyed by section 12414.26 to
the scope expressly granted by its terms also conforms to the
“general rule of statutory construction . . . that a legislative
grant of privilege or immunity is strictly construed against the
grantee.” (Katsaris v. Cook (1986) 180 Cal.App.3d 256, 265,
citing 3 Sutherland, Statutory Construction (4th ed. 1974)
§ 63.02, p. 81.)
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
“ ‘pursuant to this article’ ” (State Fund, at p. 936). We
identified what the relevant article authorized — namely,
specific forms of cooperation between insurers — and concluded
that immunity applied only if the challenged wrongdoing, the
miscalculation and misreporting of loss information, was
“related to such authorized cooperation.” (Ibid.) Because the
alleged wrongdoing was not related to any such authorized
cooperation, the insurer was not entitled to immunity.5
To similar effect is Fogel v. Farmers Group, Inc. (2008) 160
Cal.App.4th 1403, in which insurance exchanges sought
immunity under a different parallel statute, Insurance Code
section 1860.1 (section 1860.1), for their collection of certain
fees. Pointing to the plain statutory text, the Court of Appeal
explained that the collection of fees would be immune from suit
only if it was “an act done or action taken under the authority
conferred by” the relevant chapter. (Fogel, at p. 1416.) Because
the defendants could “not identify any specific provision [of the
chapter] that authorize[d] them to collect” the fees, no immunity
applied. (Ibid.; see id. at pp. 1416–1417; accord, MacKay v.
Superior Court (2010) 188 Cal.App.4th 1427, 1443 [§ 1860.1
“does not exempt all acts done ‘pursuant to’ the chapter — which
is to say, all ratemaking acts — but instead exempts acts done
5
Fidelity tries to distinguish State Fund on the ground that
the article prescribing the scope of immunity for Insurance Code
section 11758 differs from the underlying articles determining
the scope of immunity under section 12414.26. While that may
be, the relevance of State Fund does not depend on any
substantive similarity in what it is those underlying articles
authorize, but rather on the point that each statute extends
immunity only to what is authorized — whatever that may be
— and not to acts that are related to, but unauthorized by, the
underlying article.
11
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
‘pursuant to the authority conferred by this chapter’ ”]; MacKay,
at p. 1449 [immunity “does not extend to insurer conduct not
taken pursuant to that authority”].)
Much as in these prior cases, we see nothing in the plain
language of section 12414.26 that supports Fidelity’s expansive
view of its immunity from suit. The provision confers immunity
for acts, actions, or agreements authorized by articles 5.5 and
5.7. This statutory immunity does not extend to the charging of
unfiled rates because those articles confer no such authority; on
the contrary, the referenced articles expressly prohibit the
charging of unfiled rates.
We consider the text clear on this point. But to the extent
any uncertainty remains, we may also look to the provision’s
history. (See, e.g., In re Marriage of Davis (2015) 61 Cal.4th 846,
853–862; ABC Internat. Traders, Inc. v. Matsushita Electric
Corp. (1997) 14 Cal.4th 1247, 1258–1262.) That history
reinforces the conclusion that section 12414.26 was not designed
to immunize title insurers for any and all activities related to
rate-setting — including, as Fidelity would have it, charging
unfiled rates.
Section 12414.26 and the related immunity provisions (see
Ins. Code, §§ 795.7, 1860.1, 11758) were a byproduct of legal
changes in the regime governing the application of antitrust law
to the insurance field. To understand these provisions in
historical context thus requires a brief excursion into the
development of that body of law.
In its infancy, antitrust law was generally assumed not to
apply to the insurance industry. In 1869, the United States
Supreme Court had held that insurance contracts were neither
interstate nor commercial transactions for purposes of the
12
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
federal commerce clause. (Paul v. Virginia (1869) 75 U.S. 168,
182–185.) Though Paul did not expressly address the question,
the implications for federal insurance regulation seemed clear:
If an insurance contract was not interstate commerce, then
insurers could not be subject to federal regulation under the
commerce clause. Thus, when Congress later invoked its
commerce clause power to enact the Sherman Antitrust Act of
1890 and other antitrust legislation, the insurance industry
generally proceeded on the assumption that the industry lay
beyond the reach of the laws’ restrictions. (Carlson, The
Insurance Exemption from the Antitrust Laws (1979) 57 Tex.
L.Rev. 1127, 1130.) The same assumption applied to this state’s
antitrust laws, which similarly trained their sights on
combinations operating to restrain “commerce.” (Stats. 1907,
ch. 530, § 1, p. 984; see Speegle v. Board of Fire Underwriters
(1946) 29 Cal.2d 34, 43 (Speegle).) This assumption led insurers
to engage in the common industry practice of sharing claims
history information to assist in setting premiums, free from
worries about potential liability for engaging in concerted
action. (Cf. Group Life & Health Ins. Co. v. Royal Drug Co.
(1979) 440 U.S. 205, 221 [noting “the widespread view that it is
very difficult to underwrite risks in an informed and responsible
way without intra-industry cooperation”]; Speegle, at p. 45;
State Deputy Ins. Comr. J. R. Maloney, letter to Governor Earl
Warren re Sen. Bill No. 1572 (1947 Reg. Sess.) June 10, 1947,
p. 1.)
The assumption was proved false in 1944, however, when
the United States Supreme Court decided U.S. v. Underwriters
Assn. (1944) 322 U.S. 533. In that case, the court revisited and
overruled Paul, concluding that insurance qualified as
interstate commerce after all and that nothing in the Sherman
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Act exempted insurers from its reach. (Underwriters Assn., at
pp. 553, 560–561.) This court shortly followed suit, concluding
that state antitrust law likewise contained no exemption for
insurers and so they could be found liable under the state’s
principal antitrust law, the Cartwright Act. (Speegle, supra, 29
Cal.2d at pp. 43–46; see Bus. & Prof. Code, §§ 16700–16758.)
These developments significantly altered the insurance
landscape. Newly faced with significant antitrust exposure,
insurers quickly sought both federal and state legislative relief.
Their efforts were successful. In 1945, Congress enacted the
McCarran-Ferguson Act, which provided that states would
continue to play the primary role in regulating the insurance
industry. (15 U.S.C. §§ 1011–1015; see Group Life & Health Ins.
Co. v. Royal Drug Co., supra, 440 U.S. at pp. 217–220.) The
federal statute further declared a temporary moratorium on
applying federal antitrust law to the insurance industry (15
U.S.C. § 1013), with application of federal law to resume only to
the extent the insurance industry was not regulated in a given
state by the end of the moratorium period (id., § 1012(b).) In
response, the California Legislature passed the McBride-
Grunsky Insurance Regulatory Act of 1947. (Stats. 1947, ch.
805, pp. 1896–1908 (McBride-Grunsky Act); State Fund, supra,24 Cal.4th at p. 938.) By supplying rudimentary regulation of
certain lines of insurance, the McBride-Grunsky Act ensured
that insurers would remain exempt from federal antitrust
regulation. (See State Fund, at p. 939; Donabedian v. Mercury
Ins. Co. (2004) 116 Cal.App.4th 968, 980; State Deputy Ins.
14
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Comr. J. R. Maloney, letter to Governor Earl Warren re Sen. Bill
No. 1572, supra, June 10, 1947, pp. 1–2.)6
The immunity language now found in section 12414.26
traces its origins to this early legislative effort at state insurance
regulation. One of the stated purposes of the McBride-Grunsky
Act was to authorize and define the permissible extent of
“cooperation between insurers in rate making and other related
matters.” (Ins. Code, former § 1850, added by Stats. 1947,
ch. 805, § 1, p. 1896 and repealed by Prop. 103, § 7, as approved
by voters, Gen. Elec. (Nov. 8, 1988).) Former section 1853, for
example, permitted insurers to share information and act in
concert when setting rates, while former section 1853.6 largely
prohibited agreements to adhere to the same rates. (Ins. Code,
former § 1853, added by Stats. 1947, ch. 805, § 1, p. 1898 and
repealed by Prop. 103, § 7, as approved by voters, Gen. Elec.
(Nov. 8, 1988); Ins. Code, former § 1853.6, added by Stats. 1947,
ch. 805, § 1, p. 1899 and repealed by Prop. 103, § 7, as approved
by voters, Gen. Elec. (Nov. 8, 1988).) In tandem with these
6
The McBride-Grunsky Act was designed only to “enact[]
the minimal regulation required to exempt California insurance
from federal antitrust law.” (King v. Meese (1987) 43 Cal.3d
1217, 1240 (conc. opn. of Broussard, J.).) The law made
California “a so-called ‘open rate’ state,” with rates “set by
insurers without prior or subsequent approval by the . . .
Commissioner.” (Id. at p. 1221 (maj. opn).) Indeed, the act
prohibited the Commissioner from fixing rates, relying instead
on the open market to dictate rates. (See Ins. Code, former
§ 1850, added by Stats. 1947, ch. 805, § 1, p. 1896 and repealed
by Prop. 103, § 7, as approved by voters, Gen. Elec. (Nov. 8,
1988); 20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216,
287, fn. 15, 300.) Under this regime, “ ‘California ha[d] less
regulation of insurance than any other state . . . .’ ” (Garamendi,
at p. 240.)
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
provisions, the Legislature conferred immunity on insurers who
engaged in such authorized activities. Section 1860.1 provides:
“No act done, action taken or agreement made pursuant to the
authority conferred by this chapter[7] shall constitute a violation
of or grounds for prosecution or civil proceedings under any
other law of this State heretofore or hereafter enacted which
does not specifically refer to insurance.”
In later years, the Legislature would enact several
additional pieces of similar legislation regulating additional
lines of insurance that had been excluded from the McBride-
Grunsky Act. Each time it included a similar immunity
provision. First, in 1951, acting to address concerns that
workers’ compensation insurers working in concert might be
subject to federal antitrust prohibitions, the Legislature enacted
workers’ compensation insurance legislation paralleling the
McBride-Grunsky Act. (Ins. Code, §§ 11750–11759.2; State
Fund, supra, 24 Cal.4th at pp. 939–940.) The legislation
included new Insurance Code section 11758, modeled on section
1860.1: “No act done, action taken or agreement made pursuant
to the authority conferred by this article shall constitute a
violation of or grounds for prosecution or civil proceedings under
any other law of this State heretofore or hereafter enacted which
does not specifically refer to insurance.” (Ins. Code, § 11758.)
And in 1963, as part of a new article in the Insurance Code
(§§ 795–795.7) aimed at improving insurance options for the
elderly, the Legislature enacted Insurance Code section 795.7:
“No act done, action taken or agreement made pursuant to the
7
Division 1, part 2, chapter 9 of the Insurance Code (former
§§ 1850–1860.3), i.e., the chapter added by the McBride-
Grunsky Act.
16
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
authority conferred by this article shall constitute a violation of
or grounds for prosecution or civil proceedings under any other
law of this State heretofore or hereafter enacted which does not
specifically refer to insurance.”
Finally, in 1973, the Legislature turned to title insurance.
Because the McBride-Grunsky Act expressly exempted this
category (Ins. Code, § 1851, subd. (d)), title insurance rates were
to that point unregulated.8 With title insurers facing suits
alleging state antitrust violations, the industry sponsored a
measure that would extend McBride-Grunsky-Act-style rate
regulation to title insurance, while supplying, as the McBride-
Grunsky Act had, future immunity from antitrust liability for
certain concerted actions.9 To that end, the Legislature largely
copied the same immunity language it had used in the McBride-
Grunsky Act and subsequent legislation.10
8
See Department of Finance, Enrolled Bill Report on
Senate Bill No. 1293 (1973–1974 Reg. Sess.) prepared for
Governor Reagan (Sept. 25, 1973) page 1; Legislative Analyst,
analysis of Senate Bill No. 1293 (1973–1974 Reg. Sess.) as
amended August 27, 1973, page 1.
9
See Assembly Finance & Insurance Committee, analysis
of Senate Bill No. 1293 (1973–1974 Reg. Sess.) as amended
August 27, 1973; Senator George N. Zenovich, author of Senate
Bill No. 1293 (1973–1974 Reg. Sess.) letter to Governor Ronald
Reagan, September 18, 1973, page 1; Assistant Legislative
Counsel Sean E. McCarthy, California Land Title Association,
letter to Governor Ronald Reagan re Senate Bill No. 1293 (1973-
1974 Reg. Sess.) September 17, 1973, pages 1, 3, 5.
10
As originally introduced, the legislation extended
immunity to acts authorized under the title insurance chapter.
(Sen. Bill No. 1293 (1973–1974 Reg. Sess.) as amended Aug. 27,
1973, § 15.) Shortly before final passage, the provision was
17
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
As this history reveals, and as numerous courts have
observed over time, the language of these statutes was originally
drafted to ensure that insurers would not be subject to antitrust
liability for consulting with each other before establishing their
rates. (See State Deputy Ins. Comr. J. R. Maloney, letter to
Governor Earl Warren re Sen. Bill No. 1572, supra, June 10,
1947, pp. 1–2; Deputy Atty. Gen. Harold B. Haas,
interdepartmental communication to Governor Earl Warren re
Sen. Bill No. 1572 (1947 Reg. Sess.) June 11, 1947, pp. 3, 13;
State Fund, supra, 24 Cal.4th at pp. 938–940; Fogel v. Farmers
Group, Inc., supra, 160 Cal.App.4th at p. 1410; Donabedian v.
Mercury Ins. Co., supra, 116 Cal.App.4th at p. 990.) The
available committee reports concerning section 12414.26
amended to narrow immunity to only those acts authorized by
specific articles: “No act done, action taken, or agreement made
pursuant to the authority conferred by Article 5.5 (commencing
with Section 12401) or Article 5.7 (commencing with Section
12402) of this chapter shall constitute a violation of or grounds
for prosecution or civil proceedings under any other law of this
state heretofore or hereafter enacted which does not specifically
refer to insurance.” (Sen. Bill No. 1293 (1973–1974 Reg. Sess.)
as amended Sept. 10, 1973, § 15.)
As noted above (ante, p. 6), in 1988, voters passed
Proposition 103, an initiative that discarded much of the
original McBride-Grunsky Act and replaced it with a drastically
revised insurance rate regulation scheme. (See generally 20th
Century Ins. Co. v. Garamendi, supra, 8 Cal.4th at pp. 239–246;
Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, 812–813;
MacKay v. Superior Court, supra, 188 Cal.App.4th at pp. 1445–
1446.) But the McBride-Grunsky Act’s exemption for title
insurance was left in place (see Ins. Code, §§ 1851, subd. (d),
1861.13; Calfarm Ins. Co., at p. 812, fn. 1), and so these reforms
did not alter the framework for title insurance rate regulation,
which remains subject to the McBride-Grunsky-Act-style rules
specific to title insurance adopted in 1973.
18
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
express a parallel purpose — to extend the same McBride-
Grunsky-Act-style rate regulation to title insurance while
permitting the use of industry rating organizations and the
exchange of loss experience data. (Sen. Ins. & Financial Insts.
Com., analysis of Sen. Bill No. 1293 (1973–1974 Reg. Sess.) as
amended June 12, 1973, pp. 2–3; Assem. Financial & Ins. Com.,
analysis of Sen. Bill No. 1293, supra, as amended Aug. 27, 1973;
Dept. of Insurance, analysis of Sen. Bill No. 1293 (1973–1974
Reg. Sess.) as amended Aug. 27, 1973; Sen. George N. Zenovich,
author of Sen. Bill No. 1293, letter to Governor Ronald Reagan,
supra, Sept. 18, 1973, p. 1.)
Read against the backdrop of this history, section
12414.26 is best understood as an effort to reconcile the tension
between what is explicitly allowed by articles 5.5 (Ins. Code,
§ 12401 et seq.) and 5.7 (Ins. Code, §12402 et seq.) and what is
potentially disallowed by other noninsurance statutes, most
prominently the Cartwright Act and other antitrust acts. It
creates a safe harbor for actions authorized by articles 5.5 and
5.7 and harmonizes title insurance law with background state
laws governing business competition and other matters. The
history offers no hint that either section 12414.26 or its
predecessor immunity provisions were ever thought to
categorically immunize all ratemaking activity — even
unauthorized activity — from suit.
Finally, we may consider the views of the Insurance
Commissioner himself. (See Yamaha Corp. of America v. State
Bd. of Equalization (1998) 19 Cal.4th 1, 7 (Yamaha) [“an
agency’s interpretation [of a statute] is one among several tools
available to the court”].) The Commissioner is charged by
statute with enforcing compliance with the title insurance
ratemaking scheme. (See Ins. Code, §§ 12414.13–12414.31.)
19
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
For decades, the Commissioner has consistently maintained the
view that section 12414.26 and its parallel statutes do not
immunize against civil suit the charging of unauthorized rates,
but rather are aimed at concerted activities that would
otherwise be susceptible to challenge under the antitrust laws.
(See, e.g., State Fund, supra, 24 Cal.4th at p. 940 [relating and
giving weight to this position in the context of Ins. Code, § 11758
immunity]; Donabedian v. Mercury Ins. Co., supra, 116
Cal.App.4th at p. 990 [same, in the context of § 1860.1
immunity]; Gen. Counsel Adam Cole, Dept. of Ins., letter to
Chief Justice Ronald M. George, Nov. 19, 2010, pp. 2–3
[presenting Commissioner’s position that statutes do not
immunize against civil suits challenging individual insurer’s
rates]; id. at pp. 3–4 [recounting repeated instances of previous
Commissioners taking the same view as far back as 1991].)
Acting as an amicus curiae in this case, the current
Commissioner maintains the same position, urging that section
12414.26 was intended only to afford “immunity for certain
types of concerted ratemaking activity that would otherwise be
subject to the Cartwright Act or other antitrust laws” and
should not be read to immunize the charging of unfiled rates.
These views do not bind us; questions of statutory
interpretation are ultimately for this court to decide. (E.g,
Association of California Ins. Companies v. Jones (2017) 2
Cal.5th 376, 389–390.) But the Commissioner’s interpretation
of section 12414.26 is, like interpretive rules generally, due
weight and respect insofar as contextual factors suggest that the
interpretation rests on institutional expertise giving the
Commissioner a “ ‘comparative interpretive advantage’ ” and
that the interpretation is “ ‘probably correct.’ ” (Yamaha, supra,
19 Cal.4th at p. 12.) Here, the Commissioner’s view is
20
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
consistent and long-standing, having been maintained by five
different Commissioners across a period stretching back nearly
30 years. It has roots in an even longer period of experience
overseeing the mechanisms for enforcing insurers’ ratemaking
and rate-filing obligations. Such a history justifies treating the
Commissioner’s position with considerable respect. (See Ste.
Marie v. Riverside County Regional Park & Open-Space Dist.
(2009) 46 Cal.4th 282, 292–293; Yamaha, at pp. 13, 14.) The
Commissioner’s views, moreover, draw on the best evidence
available from the statutory text and legislative history and
align with the conclusions logically inferable from those sources
(see Yamaha, at p. 14 [the soundness of an agency’s reasoning
adds to its power to persuade]). The Commissioner’s views thus
reinforce our conclusion that section 12414.26 does not
immunize title insurers from suits based on the charging of
unfiled rates.
Villanueva, the Commissioner, and other amici curiae
urge us to hold more broadly that section 12414.26 immunizes
insurers only against antitrust liability for concerted actions.
Their argument raises interpretive questions unnecessary to the
resolution of this case, and we do not decide them here. (See
Fogel v. Farmers Group, Inc., supra, 160 Cal.App.4th at p. 1416
[declining to decide whether immunity extended only to
concerted action because even under a broader reading the
challenged action was manifestly not within the statutory
immunity].)11 Even if the immunity granted by section 12414.26
11
Concerning the parallel language in a sister statute, the
Court of Appeal has observed: “[W]hile the initial motivation
behind Insurance Code section 1860.1 may have been exemption
21
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
extends beyond antitrust laws, nothing in the text, surrounding
scheme, or legislative history supports extending the provision
to immunize what article 5.5 itself expressly prohibits.
B.
Fidelity offers several additional arguments in favor of its
expansive reading of section 12414.26, but none is persuasive.
First, like the Court of Appeal, Fidelity relies on language
in Quelimane, supra, 19 Cal.4th 26. In Quelimane, this court
reversed a determination that section 12414.26 barred an action
based on conspiracy to refuse to issue title insurance policies for
certain categories of properties. We explained that the scope of
section 12414.26 immunity is limited to actions taken under
articles 5.5 and 5.7 and, generally speaking, “Article 5.5 applies
only to rate regulation, article 5.7 only to advisory organizations
which supply data related to ratemaking.” (Quelimane, at
pp. 44–45.) Because the “Court of Appeal did not consider the
restriction to ratemaking-related activities in Insurance Code
section[] 12414.26,” it erroneously extended the statutory
immunity to an agreement (a conspiracy not to issue policies at
all) entirely unrelated to ratemaking. (Quelimane, at p. 46.)
Fidelity argues that our description of section 12414.26 as
restricted to ratemaking-related activities should control the
outcome here. After all, Fidelity contends, charging unfiled
from antitrust laws in particular, it was recognized [at the time
of enactment] that the language of the exemption was, in fact,
broader.” (MacKay v. Superior Court, supra, 188 Cal.App.4th at
p. 1445.) Neither Villanueva nor the Commissioner addresses
whether the language of section 12414.26 sweeps more broadly
than concerted action, and we do not attempt to resolve the issue
here.
22
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
rates is an activity related to ratemaking, even if it is not an “act
done . . . pursuant to the authority conferred by” the ratemaking
provisions of article 5.5 or 5.7. (§ 12414.26.) Fidelity’s argument
overreads Quelimane by a fair stretch. Quelimane did not
purport to cast aside the actual terms of the statute. It merely
identified a necessary condition for immunity — that the
challenged act, action, or agreement relate to ratemaking, as do
articles 5.5 and 5.7 — without offering a comprehensive
overview of section 12414.26 immunity. Quelimane’s truncated
description was more than adequate for purposes of that case,
because even when discussed in that fashion, it was apparent
that the scope of these articles (loosely speaking, ratemaking)
and the allegations of the Quelimane complaint (a conspiracy
not to issue policies) did not overlap. There was no need to
describe the conduct immunized by section 12414.26 with any
greater precision.
Even so, Fidelity would read Quelimane as establishing
not just a necessary condition for immunity, but a sufficient one:
so long as the alleged conduct relates to ratemaking in some
way, it automatically is immunized by section 12414.26. It is
simply a logical fallacy to infer from Quelimane’s holding — if
conduct does not relate to ratemaking, it cannot be immunized
by section 12414.26 — that if conduct does relate to ratemaking,
it necessarily is immunized by section 12414.26. Quelimane
said no such thing, and overreading it in this fashion would lead
to results Quelimane surely did not intend.
Consider, for example, the case of an insurer that deviates
from its filed rates to impose higher rates for African-Americans
seeking title insurance for home purchases in particular
neighborhoods. Such a policy would surely relate to ratemaking:
The insurer effectively has two rate schedules, one for African-
23
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Americans and another for those of other races. Such a policy
would also be clearly illegal — not only under general
antidiscrimination laws like the Unruh Civil Rights Act and the
Fair Employment and Housing Act, but also under article 5.5
itself. (Civ. Code, § 51 [prohibiting racial discrimination in the
provision of services by businesses]; Gov. Code, § 12955,
subds. (d), (i) [prohibiting racial discrimination by businesses
engaged in real estate transactions]; Ins. Code, § 12401.3, subd.
(a) [“Rates shall not be . . . unfairly discriminatory”].) Under
Fidelity’s view of section 12414.26 immunity, the illegality
would make no difference; a consumer aggrieved by the
discriminatory rate could not sue. Quelimane is not fairly read
to establish such a rule, particularly in the face of clear textual
and historical indications that section 12414.26 immunity was
intended to have a much more limited reach.
Fidelity, like the Court of Appeal, also invokes Walker v.
Allstate Indemnity Co. (2000) 77 Cal.App.4th 750 and MacKay
v. Superior Court, supra, 188 Cal.App.4th 1427 in support of its
proposed reading of section 12414.26. (See Villanueva v.
Fidelity National Title Co., supra, 26 Cal.App.5th at pp. 1120–
1124.) Those cases, however, involved challenges to certain
insurance rates that were actually filed with and approved by
the Commissioner. Specifically, after Proposition 103, insurers
were required to file automobile insurance rate applications
with the Commissioner and await approval before imposing
them. (Ins. Code, § 1861.05; see Calfarm Ins. Co. v. Deukmejian,
supra, 48 Cal.3d at p. 813.) In Walker and MacKay, the insurers
had done so, but were nevertheless being sued for charging these
filed and approved rates. The Courts of Appeal concluded the
governing immunity statute, section 1860.1, “must bar claims
based upon an insurer’s charging a rate that has been approved
24
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
by the commissioner.” (Walker, at p. 756; see MacKay, at
p. 1449 [finding “no tort liability for charging a rate that has
been approved by the commissioner”].)
Unlike the automobile insurance rates at issue in Walker
and MacKay, title insurance rates need not receive formal
approval from the Commissioner, but need only be filed in order
to become, after a waiting period, effective. (See Ins. Code,
§§ 12401.1, 12401.2, 12401.7.) But as the trial court and Court
of Appeal concluded, Fidelity did not fulfill even these lesser
responsibilities: It did not establish or file certain rates, identify
the services covered by others, or hold off charging rates until
after they became effective, and so “failed to comply with
sections 12401.1, 12401.2, and 12401.7.” (Villanueva v. Fidelity
National Title Co., supra, 26 Cal.App.5th at p. 1126.) For this
reason, neither Walker nor MacKay can help Fidelity’s case.
(See MacKay v. Superior Court, supra, 188 Cal.App.4th at
p. 1449 [distinguishing “cases [in which] the underlying conduct
was not the charging of an approved rate”]; Donabedian v.
Mercury Ins. Co., supra, 116 Cal.App.4th at p. 992
[distinguishing Walker as involving “a challenge to approved
rates”].)
Finally, Fidelity raises a practical argument. It notes that
section 12414.26 supplies not just immunity from liability but
immunity from suit. (See § 12414.26 [acts that are the subject
of immunity shall not “constitute . . . grounds for prosecution or
civil proceedings”].) Fidelity argues that for any such immunity
to be meaningful, it must always be demonstrable at the earliest
possible opportunity, i.e., on demurrer. From this premise,
Fidelity argues that the substantive standard for when
immunity applies must be defined in such a way that its
application can be determined at a glance from the pleadings —
25
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
an imperative that argues in favor of extending immunity to all
acts connected with ratemaking.
The argument rests on a flawed premise. That the
Legislature granted insurers immunity from suit for certain acts
does not excuse insurers, as the parties claiming entitlement to
that protection, from having to demonstrate, with evidence if
necessary, that the preconditions for its invocation have been
met. Qualified immunity, for example, likewise supplies “an
immunity from suit rather than a mere defense to liability.”
(Mitchell v. Forsyth (1985) 472 U.S. 511, 526.) But the immunity
attaches only once its basis is apparent; allegations that would
defeat qualified immunity will allow suit to proceed, and
dismissal may in some cases not occur until a motion for
summary judgment (see ibid.) or later (see, e.g., Johnson v.
Jones (1995) 515 U.S. 304, 317–320 [denying interlocutory
review of summary judgment denial that required defendants
asserting qualified immunity to go to trial]; Harlow v. Fitzgerald
(1982) 457 U.S. 800, 819–820 [remanding for lower court to
determine whether, in face of claimed qualified immunity, case
could go to trial]). That section 12414.26 includes language
establishing a broad procedural protection offers no basis to
disregard other language in the statute, limiting immunity to
any “act done, action taken, or agreement made” pursuant to
specific statutory sources of authority (§ 12414.26), that more
narrowly defines the universe of conduct to which it applies.
Even so construed, section 12414.26 still provides a basis for
bringing a lawsuit to a prompt end, once the statutory
prerequisites have been shown.
26
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
IV.
We turn to Fidelity’s alternative argument that
Villanueva’s lawsuit is barred because a proceeding before the
Commissioner is a consumer’s exclusive remedy for the charging
of an unfiled rate. Notably, Fidelity disavows any argument
that this statutory administrative proceeding must be
exhausted before filing a suit in superior court or that a superior
court should refer such a suit to the Commissioner under the
doctrine of primary jurisdiction.12 Fidelity’s argument about the
role of administrative proceedings is considerably broader.
Focusing our attention on this broad alternative argument for
affirmance, we agree with Villanueva and the Commissioner
that administrative proceedings are not a ratepayer’s exclusive
remedy for the charging of an unfiled rate.
Article 6.7 (Ins. Code, §§ 12414.13–12414.19) of the
chapter covering title insurance provides for administrative
12
When primary jurisdiction applies, an initial suit in court
is permitted, although the trial court may thereafter choose to
stay the action and solicit an agency’s views. (Jonathan Neil &
Assoc., Inc. v. Jones (2004) 33 Cal.4th 917, 931–933; Farmers
Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 390–392.)
When exhaustion applies, a party must pursue an
administrative remedy initially, but may thereafter file suit in
court. (Jonathan Neil, at pp. 930–931; Farmers Ins. Exchange,
at p. 390.) When a statutory regime vests exclusive jurisdiction
in an agency, in contrast, a party may only proceed
administratively and thereafter may only challenge the results
of any administrative outcome through administrative
mandamus (Code Civ. Proc., § 1094.5) or such other means as
the statutory scheme may specify (see, e.g., Lab. Code,
§ 1700.44, subd. (a) [exclusive jurisdiction vested in the Labor
Commissioner, with review by way of trial de novo in superior
court]).
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
proceedings before the Commissioner in the event of disputes
over charged rates or rating plans or systems. First, a “person
aggrieved by any rate charged . . . by a title insurer . . . may
request such person or entity to review the manner in which the
rate, plan, system, or rule has been applied with respect to
insurance or services afforded him. Such request . . . shall be
written.” (Id., § 12414.13.) If unable to obtain satisfaction from
the insurer, the aggrieved consumer may then turn to the
Commissioner: “Any person aggrieved by the action of any such
person or entity in refusing the review requested, or in failing or
refusing to grant all or part of the relief requested, may file a
written complaint and request for hearing with the
commissioner, specifying the grounds relied upon.” (Ibid.)
Under this provision, a written complaint to the regulated entity
is a necessary prerequisite to a written complaint to the
Commissioner; it is only if the written complaint fails that a
person is “aggrieved” and entitled to seek a hearing with the
Commissioner. (Ibid.) But nothing in either Insurance Code
section 12414.13 or the remainder of article 6.7 suggests that a
complaint to the Commissioner is exclusive of any other remedy
that might be available to the consumer, including remedies
otherwise available in judicial proceedings.13
13
Fidelity further notes that other parts of the statutory
scheme give the Commissioner additional responsibilities for
interpreting and enforcing the rate-filing requirements of the
title insurance chapter. For example, Insurance Code section
12340.7 gives the Commissioner the authority to promulgate
regulations identifying certain “miscellaneous charges” that are
not subject to regulation as rates. But nothing about this grant
of rulemaking authority implies exclusive jurisdiction over
consumer claims based on failure to comply with the relevant
provisions of the title insurance law.
28
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
The language in Insurance Code section 12414.13
contrasts with that of other schemes where the Legislature has
made manifest its intent to establish an exclusive
administrative remedy. For example, the Talent Agencies Act
(Lab. Code, §§ 1700–1700.47) regulates relations between
artists in Hollywood and those who represent them (see
Marathon Entertainment, Inc. v. Blasi (2008) 42 Cal.4th 974,
984–985). A provision of the act requires that disputes under it
be submitted in the first instance to the Labor Commissioner:
“In cases of controversy arising under this chapter, the parties
involved shall refer the matters in dispute to the Labor
Commissioner, who shall hear and determine the same, subject
to an appeal within 10 days after determination, to the superior
court where the same shall be heard de novo.” (Lab. Code,
§1700.44, subd. (a), italics added.) This language, using the
mandatory “shall,” grants “original and exclusive jurisdiction
over issues arising under the Act” to the Labor Commissioner.
(Marathon Entertainment, Inc., at p. 981, fn. 2; see Styne v.
Stevens (2001) 26 Cal.4th 42, 54–56.)
The state’s workers’ compensation scheme is to similar
effect. The Legislature has set out an administrative procedure
for injured workers to file for and obtain compensation for
workplace injuries. (Lab. Code, §§ 3200–6149; see Cal. Const.,
art. XIV, § 4 [authorizing the Legislature to establish and vest
an administrative body with jurisdiction “to determine any
dispute” arising under the workers’ compensation law].) The
statutory scheme expressly makes that compensation, in the
cases where it is available, “the exclusive remedy” for such
injuries. (Lab. Code, § 3601, subd. (a); see id., § 3602, subd. (a)
[“sole and exclusive remedy”].) The scheme also explicitly
provides that “[a]ll the following proceedings shall be instituted
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
before the [Workers’ Compensation Appeals Board] and not
elsewhere,” including claims seeking compensation, to enforce
liability for compensation, and so on. (Id., § 5300; see King v.
CompPartners, Inc. (2018) 5 Cal.5th 1039, 1056–1057.) Through
the use of such express language, the Legislature has ousted
superior courts of jurisdiction and granted the Workers’
Compensation Appeals Board “exclusive jurisdiction to
determine the extent of recovery for an injury” covered by the
workers’ compensation scheme. (Unruh v. Truck Insurance
Exchange (1972) 7 Cal.3d 616, 624.)
The language of these statutes shows that the Legislature
knows how to prescribe exclusivity when it so intends. The
Legislature used no comparable language here. In describing a
consumer’s right to file a complaint with the Commissioner, the
Legislature used the permissive “may” rather than the
mandatory “shall.” (See Ins. Code, § 16 [governing
interpretation of the two terms].) And the Legislature included
no other language expressly making proceedings before the
Commissioner the exclusive avenue of recourse. In the absence
of such language, we infer the Legislature did not intend such a
result.
In evaluating whether a remedial scheme was intended to
be exclusive, we may also consider the scope of the recourse it
affords. We have said that exhaustion of a remedy prior to
pursuing a civil suit — never mind, as Fidelity urges here,
exclusivity — may not be required if the relief available is
materially incomplete. (See Ramos v. County of Madera (1971)
4 Cal.3d 685, 691 [“ ‘The rule that a party must exhaust his
administrative remedies prior to seeking relief in the courts “has
no application in a situation where an administrative remedy is
unavailable or inadequate” ’ ”].) Of course, we do not doubt the
30
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
Legislature has the power to limit aggrieved parties to an
administrative forum, even if that forum is incapable of
supplying a make-whole remedy. But an incomplete remedial
scheme offers some indication as to whether the Legislature
intended the administrative forum to serve as an exclusive path
to relief.
Here, Villanueva seeks restitution on a classwide basis,
but as Villanueva notes (and the Commissioner agrees), the
statutory scheme grants the Commissioner no power to issue
restitution to aggrieved individual consumers, never mind a
class of them. The only relief the Commissioner can provide is
an order prohibiting the unlawful rate or suspending or
revoking the insurer’s license. (See Ins. Code, §§ 12414.16,
12414.17; State Fund, supra, 24 Cal.4th at p. 938 [noting the
Ins. Code contains no provision authorizing the Commissioner
to order refunds to insureds of improper charges].) To interpret
article 6.7 as supplying consumers’ sole avenue of recourse
would leave them unable to obtain restitution of, or have the
insurer disgorge, illegal overcharges. It would, as the
Commissioner argues, undermine the stated overarching goal of
ensuring that insurers do not impose excessive or unfairly
discriminatory rates. (Ins. Code, § 12401.) In some cases where
a violation is too minor to warrant a license suspension,
exclusivity would eliminate any effective deterrent, and in other
cases where a suspension is imposed, the absence of restitution
would render any remedy incomplete. For this reason, the
Commissioner in his briefing urges that “private enforcement is
an important complement to the Department[ of Insurance]’s
jurisdiction and consumer protection mission.”
Fidelity disputes the premise, arguing that the
Commissioner does in fact have authority to order restitution in
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VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
proceedings under Insurance Code section 12414.13 et seq.
Fidelity’s argument rests on Insurance Code section 12414.18,
which sets out the procedures to be followed when denying,
suspending, or revoking an insurer’s license, incorporating by
reference the rules set out in Government Code sections 11500
to 11529. The statute also provides that the “commissioner shall
have all the powers granted to him” in that chapter of the
Government Code. (Ins. Code, § 12414.18.) Among these are
the power to file an accusation (Gov. Code, §§ 11503, subd. (a),
11507), to obtain discovery (id., § 11507.6), to hear a case (id.,
§ 11512), to issue a decision (id., § 11517), and to certify official
acts (id., § 11528).
Fidelity argues that one statute in the cross-referenced
chapter, Government Code section 11519.1, grants the
Commissioner the power to order restitution. Fidelity’s
argument is unsound. While nearly every other statute in the
chapter grants powers generically to any “agency,” defined as
every “state board[], commission[], and officer[] to which this
chapter is made applicable by law” (Gov. Code, § 11500,
subd. (a)), Government Code section 11519.1 is far more
circumscribed: It authorizes “an order of restitution” only in a
very narrow subset of proceedings, those involving a “decision
rendered against a licensee under Article 1 (commencing with
Section 11700) of Chapter 4 of Division 5 of the Vehicle Code”14
(Gov. Code, § 11519.1, subd. (a)). It does not authorize any other
agencies in any other proceedings to issue restitution. Had the
Legislature intended the procedural rules of the chapter to
include a broad grant of authority to agencies to issue
14
That article pertains generally to the licensing of car
dealers by the Department of Motor Vehicles.
32
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
restitution, it presumably would have used the same unlimited,
generic language consistently employed elsewhere in the
chapter. The Government Code and the Insurance Code
provision incorporating its procedures by reference do not grant
the Commissioner any power to order restitution to insureds.
Fidelity offers no reason why the Legislature would have
intended to consign consumers to an exclusive set of
administrative remedies incapable of offering restitution for
their losses; this failure to make any provision for restitutionary
relief offers an additional indication that the Legislature did not
intend to make administrative proceedings exclusive of all other
remedies.
Turning from the specific provisions governing
administrative rate proceedings before the Commissioner,
Fidelity also invokes Insurance Code section 12414.29 (section
12414.29) as support for its view that these proceedings are
exclusive of other remedies. Section 12414.29 provides in full:
“The administration and enforcement of Article 5.5
(commencing with Section 12401) and Article 5.7 (commencing
with Section 12402) of this chapter shall be governed solely by
the provisions of this chapter. Except as provided in this
chapter, no other law relating to insurance and no other
provisions in this code heretofore or hereafter enacted shall
apply to or be construed as supplementing or modifying the
provisions of such articles unless such other law or other
provision expressly so provides and specifically refers to the
sections of such articles which it intends to supplement or
modify. The provisions of this chapter and regulations adopted
pursuant thereto shall constitute the exclusive regulation of the
conduct of escrow and title transactions by entities engaged in
33
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
the business of title insurance as defined in Section 12340.3,
notwithstanding any local regulation or ordinance.”
Fidelity’s argument rests solely on the first two sentences
of the provision; we have previously explained that the third
sentence, which was added to the statute some years after it was
enacted, serves “to preempt local regulation, not to exempt title
insurers from other state laws governing unfair business
practices” (Quelimane, supra, 19 Cal.4th at p. 45), and so it has
no bearing on the viability of Villanueva’s UCL claim. According
to Fidelity, the requirements that the “enforcement of Article 5.5
. . . shall be governed solely by the provisions of this chapter,”
and “no other law relating to insurance” shall apply absent
express provision (§ 12414.29), permit administrative
proceedings before the Commissioner (Ins. Code, §§ 12414.13–
12414.19), but preclude enforcement of article 5.5 through any
other means, including the UCL suit at issue here.
Read in isolation, the first sentence — “The
administration and enforcement of Article 5.5 (commencing
with Section 12401) and Article 5.7 (commencing with Section
12402) of this chapter shall be governed solely by the provisions
of this chapter” — might seem to support Fidelity’s view.
(§ 12414.29.) But this sentence and the following sentence were
enacted together and are better read and understood together.
The first sentence limits administration and enforcement of
articles 5.5 and 5.7 to the provisions of “this chapter,” i.e.,
Insurance Code sections 12340 to 12418.4, the chapter
specifically governing title insurance. The second sentence
explains what provisions are being excluded from application:
“Except as provided in this chapter, no other law relating to
insurance and no other provisions in this code . . . shall apply to
or be construed as supplementing or modifying the provisions of
34
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
such articles unless such other law or other provision expressly
so provides and specifically refers to the sections of such articles
which it intends to supplement or modify.” (§ 12414.29, italics
added.) In other words, the statute governs the relationship
between article 5.5 and other parts of the Insurance Code and
resolves any conflict or overlap by specifying that those
provisions specific to title insurance, rather than insurance
generally, should govern unless another provision of the
Insurance Code explicitly specifies otherwise. Section 12414.29
does not govern the relationship between the provisions of
article 5.5 and other noninsurance laws, such as the UCL.15
This reading of the text is supported by considering the
historical background and surrounding statutory scheme.
Section 12414.29 was modeled on a parallel provision in the
McBride-Grunsky Act, Insurance Code section 1860.2, which
provides in nearly identical terms: “The administration and
enforcement of this chapter shall be governed solely by the
provisions of this chapter. Except as provided in this chapter,
no other law relating to insurance and no other provisions in
this code heretofore or hereafter enacted shall apply to or be
construed as supplementing or modifying the provisions of this
15
Fidelity urges that in section 12414.29, “ ‘[n]o other law
relating to insurance’ . . . means no other law,” and if “the
Legislature meant to limit section 12414.29 to other provisions
in the Insurance Code, it could easily and clearly have said so.”
But the Legislature did clearly say so, in the very language
Fidelity quotes: “no other law relating to insurance” (§ 12414.29,
italics added), i.e., no other insurance-specific law. When the
Legislature intended to reference laws of general application
from outside the Insurance Code, it used quite different
language, as in sections 1860.1 and 12414.26 (“any other law . . .
which does not specifically refer to insurance”).
35
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
chapter unless such other law or other provision expressly so
provides and specifically refers to the sections of this chapter
which it intends to supplement or modify.” Indeed, as originally
drafted, section 12414.29 copied Insurance Code section 1860.2
verbatim (see Sen. Bill No. 1293 (1973–1974 Reg. Sess.) as
amended Aug. 27, 1973, § 15), although it was later amended to
confine its scope to the administration of specific articles rather
than the entire title insurance chapter (Sen. Bill No. 1293
(1973–1974 Reg. Sess.) as amended Sept. 10, 1973, § 15).
Section 1860.2 immediately follows section 1860.1, which,
as already discussed, served as a kind of template for the
immunity provision in section 12414.26. (Ante, pp. 15–17.)
Considered side-by-side, sections 1860.1 and 1860.2 are
naturally read to regulate distinct spheres. Section 1860.1
governs the interplay between the insurance chapter and other
noninsurance laws. (Ibid. [actions authorized under the chapter
shall not constitute violations of any state law “which does not
specifically refer to insurance”].) Section 1860.2, in contrast,
deals with the interplay between the insurance chapter and
other insurance-specific laws. (Ibid. [“no other law relating to
insurance and no other provisions in this [Insurance C]ode”
shall apply unless it expressly references the provisions of the
chapter it is intended to supplant].)
We conclude the same is true of sections 12414.26 and
12414.29. While the former deals with the interplay between
articles 5.5 and 5.7 and noninsurance laws, the latter deals with
the interplay between those articles and insurance-specific laws.
This understanding attends to the textual differences in
phrasing — one set of statutes specifically deals with laws
“relating to insurance” (Ins. Code, §§ 1860.2, 12414.29), while
the other set deals with laws that “do[] not specifically refer to
36
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
insurance” (§§ 1860.1, 12414.26). It also prevents these statutes
from duplicating each other. If section 12414.29 (and Ins. Code,
§ 1860.2) were understood to forbid not only application of other
insurance laws, but also other noninsurance laws, then section
12414.26 (as well as § 1860.1) would be superfluous.
To the extent section 12414.29 is ambiguous, we consider
the Commissioner’s view that this provision does not foreclose
suits under noninsurance laws. An administrative agency’s
interpretation of statutes regulating the extent of its power and
responsibilities is entitled to a measure of respect (Ste. Marie v.
Riverside County Regional Park & Open-Space Dist., supra, 46
Cal.4th at p. 292; see Krumme v. Mercury Ins. Co. (2004) 123
Cal.App.4th 924, 937 [“The fact that the Commissioner does not
view the trial court as having poached into the Commissioner’s
statutory domain is clearly significant, and we defer to his
interpretation of his authority”]), and so we accord weight to the
Commissioner’s view that section 12414.29 does not render his
powers to enforce article 5.5 exclusive.
Finally, Fidelity looks to case law in search of support for
its exclusivity argument, but its search turns up empty. Fidelity
notes that in Chicago Title Ins. Co. v. Great Western Financial
Corp., supra, 69 Cal.2d at page 323, an antitrust case, this court
observed in passing that “rate regulation has traditionally
commanded administrative expertise” and held allegations an
insurer was charging below-cost rates to harm competition were
subject to demurrer because “a court is not the appropriate
initial arbiter of factors involved in insurance costs.” But we
made these observations in a very different context, a complaint
that alleged illegal below-cost pricing, and thus asked courts to
weigh in on whether an insurer’s rates exceeded its costs. As we
explained in Manufacturers Life Ins. Co. v. Superior Court
37
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
(1995) 10 Cal.4th 257, Chicago Title stands for the proposition
that state antitrust and unfair competition law may in some
instances be superseded, but only to the extent “specific
provisions of the Insurance Code . . . authorize some practices
and as to others [give] the Insurance Commissioner authority to
determine the propriety of the conduct.” (Id. at p. 272.)
Krumme v. Mercury Ins. Co., supra, 123 Cal.App.4th 924 and
Donabedian v. Mercury Ins. Co., supra, 116 Cal.App.4th 968 are
likewise to no avail. Although Fidelity cites these cases in
passing as supporting exclusive original jurisdiction for the
Commissioner, neither found such exclusive jurisdiction for the
claims there at issue (challenges to an auto insurer using
broker-agents and withholding discounts based on a lack of past
insurance, respectively), and neither contains any reasoning or
analysis that would support exclusive original jurisdiction here.
The Legislature, in crafting the various provisions of the
scheme regulating title insurance, has made the relevant
decisions concerning the appropriate spheres for courts and the
Commissioner. The text of the provisions it chose to adopt does
not extend administrative exclusivity to circumstances in which
a rate was required to be filed with, but was never filed with,
the Commissioner. Nothing in the statutory scheme forecloses
a court from considering a claim that an insurer failed to meet
its threshold obligation to file a rate and then charged the rate
anyway.
V.
The Insurance Code required Fidelity to file its rates with
the Insurance Commissioner before charging consumers, but it
failed to do so. Charging an unfiled rate is not an “act done . . .
pursuant to the authority conferred by” Insurance Code section
38
VILLANUEVA v. FIDELITY NATIONAL TITLE COMPANY
Opinion of the Court by Kruger, J.
12401 et seq. (§ 12414.26). It is a violation of the express terms
of the Insurance Code, for which Fidelity enjoys no statutory
immunity from suit under section 12414.26. Nor does any
aspect of other provisions in the chapter regulating title
insurance grant to the Commissioner exclusive jurisdiction to
address consumer challenges to unfiled rates. Insurance Code
section 12414.13 supplies an administrative remedy, but it is
not exclusive of other remedies otherwise available in the courts.
The superior court therefore did not err in ruling on the merits
of Villanueva’s UCL action challenging the imposition of unfiled
rates. (See Manufacturers Life Ins. Co. v. Superior Court, supra,
10 Cal.4th at p. 263 [the Legislature generally intended the
UCL and other laws to be cumulative to the powers granted the
Commissioner to sanction insurers]; Krumme v. Mercury Ins.
Co., supra, 123 Cal.App.4th at p. 936 [“The Insurance Code does
not . . . displace the UCL ‘except as to . . . activities related to
rate setting’ ”].)
We reverse the Court of Appeal’s judgment and remand
for further proceedings not inconsistent with this opinion.
KRUGER, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
GROBAN, J.
JENKINS, J.
39
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Villaneuva v. Fidelity National Title Company
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XX 26 Cal.App.5th 1092Rehearing Granted
__________________________________________________________________________________
Opinion No. S252035
Date Filed: March 18, 2021
__________________________________________________________________________________
Court: Superior
County: Santa Clara
Judge: Peter H. Kirwan
__________________________________________________________________________________
Counsel:
Chavez & Gertler, Nance F. Becker, Mark A. Chavez; The Kick Law Firm, Taras Kick, Thomas Segal;
Shernoff Bidart Escheverria, Michael J. Bidart; 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; Allison M. Zieve for Public Citizen and Public Justice as
Amici Curiae on behalf of Plaintiffs and Appellants.
Amy Bach 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 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, Rupa G. Singh, Erica L. Calderas, Steven A. Goldfarb;
California Appellate Law Grouop, Ben Feuer, Julia Partridge and Greg Wolff for Defendant and Appellant.
Dentons US, Ronald D. Kent, Joel D. Siegel, Sonia R. Martin and Susan M. Walker 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.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Steven J. Benheim
The Bernheim Law Firm
11611 Dona Alicia Place
Studio City, CA 91436
(818) 760-7341
Greg Wolff
California Appellate Law Group LLP
96 Jessie St.
San Francisco, CA 94105
(415) 649-6700