Friday, May 22, 2009
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Court: Treble Damages Available for Seniors on UCL Claim
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal yesterday revived a class action by a group of senior citizens who were purportedly duped into buying certain high-commission annuity contracts from the National Western Life Insurance Company.
Explaining that treble damages are available to senior citizens seeking restitution under California’s Unfair Competition Law in a private action, Div. Seven granted an application for a writ of mandate directing Los Angeles Superior Court Judge Victoria Chaney to vacate her order granting judgment on the pleadings in favor of National Western.
James A. Clark filed suit against National Western in September 2004 alleging that the company had used deceptive business practices to induce him into buying high-commission annuity contracts with large surrender penalties in violation of the state unfair competition law.
Orville R. Camien and Mary F. Simms-Schmidt later joined Clark as plaintiffs in an amended complaint which included class allegations and claims for breach of contract, breach of the covenant of good faith and fair dealing and fraud.
Clark, Camien and Simms-Schmidt sought restitution of the allegedly improper surrender penalties and enhanced remedies for each cause of action under Civil Code Sec. 3345, which authorizes an award of up to three times greater than the amount of a fine, civil penalty “or any other remedy the purpose or effect of which is to punish or deter” that would otherwise be awarded in actions by or on behalf of senior citizens or disabled persons seeking to “redress unfair or deceptive acts or practices or unfair methods of competition.“
In February 2007, the trial court granted certification of a class consisting of “[a]ll California residents who purchased National Western Life Insurance Company deferred annuities when they were age 65 or older” under specified certificate forms, but only allowed the class to proceed on the unfair competition claim.
National Western then filed a motion for judgment on the pleadings and a motion for summary adjudication asserting Sec. 3345’s enhanced remedy was inapplicable to a private action under the unfair competition law.
Finding that the only available remedy under the UCL, restitution, did not have the purpose or effect of punishment or deterrence, Chaney granted National Western’s motion for judgment on the pleadings without leave to amend.
But in his opinion for the appellate court, Presiding Justice Dennis M. Perluss concluded the unambiguous language of Sec. 3345 encompasses actions under the UCL brought by or on behalf of senior citizens, including those initiated by private plaintiffs seeking only restitution.
He characterized the trial court’s interpretation of Sec. 3345 as “unduly cramped,” noting that “[c]ontrary to the trial court’s conclusion, California courts have long recognized that restitution awarded under the unfair competition law has a deterrent purpose and effect.”
The justice explained that Sec. 3345 is “a specific mandate of an enhanced remedy in actions by senior citizens or disabled persons asserting unfair competition,” and “[t]o suggest it does not apply in an action by senior citizens seeking redress for unfair competition under the unfair competition law when the only statutory prerequisites have been satisfied is to ignore the statute’s express language.”
Perluss and Justices Fred Woods and Frank Y. Jackson, also rejected arguments by amicus curie that Sec. 3345 is properly viewed as separate from Business of Professions Code Sec. 17206.1—which specified the civil penalties for violation of the UCL—as both were enacted in the same legislative bill and a natural reading of the language actually used by the Legislature compelled a contrary conclusion.
Robert S. Gianelli of Gianelli & Morris and Raymond E. Mattison of Ernst & Mattison represented Clark, Camien, and Simms-Schmidt and the certified class of plaintiffs.
Kent R. Keller and Larry M. Golub of Barger & Wolen represented National Western while Margaret M. Grignon, Robert D. Phillips Jr., James C. Martin and Wendy S. Albers of Reed Smith represented the Association of California Life and Health Insurance Companies, North American Company for Life and Health Insurance and Midland National Life Insurance Company as amici on behalf of National Western.
The case is Clark v. Superior Court (National Western Life Insurance Company), 09 S.O.S. 2805.
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