Judge Kerry Bensinger, Case Number: 23STCV06402, Date: 2024-10-14 Tentative Ruling

Counsel may submit on the tentative ruling by emailing Dept. 31 before 8:30 the morning of the hearing. The email address is smcdept31@lacourt.org. Please do not call the court to submit on the tentative. Please do not submit to the tentative ruling on behalf of the opposing party. Please do not e-mail the Court if you plan to appear and argue.

In deciding whether to submit on the tentative ruling or attend the hearing and present oral argument, please keep the following in mind:

The tentative rulings authored by this court reflect that the court has read and considered all pleadings and evidence timely submitted to the court in connection with the motion, opposition, and reply (if any). Because the pleadings were filed, they are part of the public record.

Oral argument is not an opportunity to simply regurgitate that which a party set forth in its pleadings. Nor, is oral argument an opportunity to "make a record" when there is no court reporter present and the statements and arguments of counsel are already part of the record because they were set forth in the pleadings. Finally, simply because a party or attorney disagrees with the court's analysis and ruling or is not satisfied with it does not necessarily warrant oral argument when no new arguments will be articulated.

If you submit on the tentative, you must immediately notify all other parties email that you will not appear at the hearing. If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the motions. If all parties to the motion submit, this tentative ruling will become the final ruling after the hearing date and it will be memorialized in a minute order. This tentative ruling is not an invitation, nor an opportunity, to file further documents relative to the hearing in question. No such document will be considered by the Court.

**Tentative rulings on Motions for Summary Judgment will only be available for review in the courtroom on the day of the hearing.

This action arises from a tragic car accident. On October 8, 2017, Arata Fujikawa (Fujikawa) was driving a car owned by Yoko Saito (Saito) when Fujikawa caused a multi-car collision. Matthew Ward (Matthew) was killed in the accident. Matthew is survived by his wife, Allison Ward (Allison or Plaintiff). At the time of the accident, Saito and the vehicle driven by Fujikawa were insured by an automobile insurance policy issued by Coast National Insurance Company (Coast or Defendant).

On May 24, 2018, Allison initiated a wrongful death lawsuit against Fujikawa and Saito in Orange County Superior Court (Case No. 30-2018-00994906-CU-PA-CJC) (the Wrongful Death Action).

On October 18, 2018—during the pendency of the Wrongful Death Action—Coast filed a complaint against Saito in Los Angeles County Superior Court (Case No. 18STCV01690) seeking rescission of Saito’s insurance policy with Coast (the Rescission Action). Coast alleged Saito made material misrepresentations in her policy application.

On April 17, 2019, Coast obtained a default judgment (the Rescission Judgment) against Saito. Pursuant to the Rescission Judgment, Saito’s automobile policy issued by Coast was declared void ab initio. Coast was also relieved of its duty to defend or indemnify Saito for any claims arising from the use of the covered vehicle under the voided policy. As a result of the Rescission Judgment, Coast did not defend Saito in the Wrongful Death Action. The Rescission Judgment has not been set aside or vacated.

On May 25, 2021, Allison obtained a default judgment against Saito in the sum of $20,000,000.

On September 23, 2022, Saito assigned to Allison all rights and causes of action she held against Coast.

On March 22, 2023, Allison filed a complaint against Coast for (1) declaratory judgment, (2) breach of contract, (3) breach of the implied covenant of good faith and fair dealing, and (4) violation of Business and Professions Code section 17200, et seq. Allison alleges that Coast breached its duty under the insurance policy issued to Saito to defend, settle, and/or indemnify Saito against Allison’s claims in the Wrongful Death Action and failed to conduct a reasonable investigation into Saito’s insurability, among other things. The first, second, and third causes of action are brought in Allison’s capacity as Saito’s assignee. The fourth cause of action is brought in Allison’s individual and representative capacity.

On June 1, 2023, Coast filed a demurrer (the Current Action), arguing Allison’s action was barred by the Rescission Judgment. On September 25, 2023, this court, Murillo, J., overruled Coast’s demurrer, in part, because Coast did not demonstrate that all the issues presented in this matter were the same issues litigated in the Rescission Action, “including any defenses Plaintiff may have had which were not necessary to uphold the judgment, including, among other things: (1) whether Defendant engaged in post-claims underwriting, (2) whether Defendant should have discovered Saito’s misrepresentation sooner, and (3) whether Defendant acted promptly in rescinding the contract.”

On February 27, 2024, Coast filed this Motion for Summary Judgment or Summary Adjudication of Issues.

When reviewing a motion for summary judgment or summary adjudication, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent’s claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.”¿ (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)¿¿A motion for summary judgment must be granted “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).)

“[T]he initial burden is always on the moving party to make a prima facia showing that there are no triable issues of material fact.”¿ (Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.)¿ A defendant seeking summary judgment “bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) A defendant moving for summary judgment or summary adjudication “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action . . . cannot be established, or that there is a complete defense to the cause of action.”¿ (Code Civ. Proc., § 437c, subd. (p)(2).)¿ A moving defendant need not conclusively negate an element of plaintiff’s cause of action.¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿¿

To meet this burden of showing a cause of action cannot be established, a defendant must show not only “that the plaintiff does not possess needed evidence” but also that “the plaintiff cannot reasonably obtain needed evidence.”¿ (Aguilar, supra, 25 Cal.4th at p. 854.)¿ It is insufficient for the defendant to merely point out the absence of evidence.¿ (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.)¿ The defendant “must also produce evidence that the plaintiff cannot reasonably obtain evidence to support his or her claim.”¿ (Ibid.)¿ The supporting evidence can be in the form of affidavits, declarations, admissions, depositions, answers to interrogatories, and matters of which judicial notice may be taken.¿ (Aguilar, supra, 25 Cal.4th at p. 855.)¿¿

“Once the defendant … has met that burden, the burden shifts to the plaintiff … to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)¿The plaintiff may not merely rely on allegations or denials of its pleadings to show that a triable issue of material fact exists, but instead, “shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action.”¿(Ibid.)¿ A plaintiff opposing summary judgment defeats the motion by showing one or more triable issues of material fact exist as to the challenged element. (Aguilar, supra, 25 Cal.4th at p. 849.) “If the plaintiff cannot do so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente Medical Center (2008) 159 Cal.App.4th 463, 467.)¿¿

The court must “liberally construe the evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party,” including “all inferences reasonably drawn therefrom.” (Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1037; Aguilar, supra, 25 Cal.4th at pp. 844-45.)¿ “On a summary judgment motion, the court must therefore consider what inferences favoring the opposing party a factfinder could reasonably draw from the evidence.¿ While viewing the evidence in this manner, the court must bear in mind that its primary function is to identify issues rather than to determine issues.¿ [Citation.] Only when the inferences are indisputable may the court decide the issues as a matter of law.¿ If the evidence is in conflict, the factual issues must be resolved by trial.” (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 839.)¿ “Put another way, have defendants conclusively negated a necessary element of the [plaintiff’s] case or demonstrated that under no hypothesis is there a material issue of fact that requires the process of trial?”¿ (Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, 860, internal citation omitted.)¿Further, “the trial court may not weigh the evidence in the manner of a factfinder to determine whose version is more likely true.¿ [Citation.]¿ Nor may the trial court grant summary judgment based on the court’s evaluation of credibility.¿ [Citation.]” ¿(Id. at p. 840; see also Weiss v. People ex rel. Department of Transportation (2020) 9 Cal.5th 840, 864 [“Courts deciding motions for summary judgment or summary adjudication may not weigh the evidence but must instead view it in the light most favorable to the opposing party and draw all reasonable inferences in favor of that party”].)¿¿

1. Docket of Los Angeles Superior Court Case No. 18STCV01690, entitled Coast National Insurance Company v. Yoko Saito, filed on October 18, 2018 (the Rescission Action).

2. April 17, 2019 Minute Order by Judge Richard Burdge, Jr. granting the request by Coast National for entry of default judgment in favor of Coast National and against Yoko Saito in the Rescission Action.

3. April 26, 2019 Notice of Entry of Judgment and attached April 17, 2019 Judgment in the Rescission Action.

4. Docket of Orange County Superior Court Case No. 30-2018-00994906-CU-PA-WJC, entitled Allison Ward v. Arata Fujikawa, filed on May 24, 2018 (the Wrongful Death Action).

Coast’s unopposed request for judicial notice is GRANTED. (Evid. Code, § 452, subds. (c), (d)(1).)

The court addresses the first three causes of action together because they turn primarily on Plaintiff’s ability to proceed as Saito’s assignee. The court addresses the Unfair Competition Law (UCL) cause of action separately because Plaintiff brings the UCL cause of action in her individual and representative capacity.

In Plaintiff’s first cause of action for declaratory judgment, Plaintiff seeks a judicial declaration that Saito’s automobile policy is not rescinded, and that Coast failed to perform its obligations under the Policy. Those obligations included defending, settling on behalf of, and indemnifying Saito in the Wrongful Death Action. Plaintiff alleges Coast breached these obligations when it unlawfully rescinded the policy in the Rescission Action instead of tendering a defense, settling Allison’s lawsuit, or indemnifying Saito. These allegations support Plaintiff’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing, respectively.

Defendant moves for summary adjudication of these causes of action because the Rescission Judgment declared Saito’s policy void ab initio. The policy is therefore treated as though it never existed. (DuBeck v. California Physicians’ Service (2015) 234 Cal.App.4th 1254, 1264.) Coast argues the declaratory judgment, breach of contract, and breach of the implied covenant causes of action are foreclosed by the Rescission Judgment because Coast did not owe a duty to Saito, and by extension, to Plaintiff as Saito’s assignee.[1] But the Rescission Judgment was obtained in a different case. To defeat Plaintiff’s claims, Coast raises the barrier of the Rescission judgment by execution of the doctrine of collateral estoppel.

Naturally, Plaintiff disagrees and resists the application of res judicata/collateral estoppel. Independently, Ward engages a collateral attack on the Rescission Judgment because, as Plaintiff argues, the Rescission Judgment is void “on its face.”

Both parties point to and rely upon Barrera v. State Farm Mut. Auto. Ins. Co. (1969) 71 Cal.2d 659 (Barrera). Because the Supreme Court succinctly recounted Barrera in a subsequent decision, Philadelphia Indemnity Ins. Co. v. Montes Harris (2006) 40 Cal.4th 151 (Philadelphia Indemnity), the court quotes Philadelphia Indemnity at length as follows:

“In Barrera, the plaintiff had previously obtained a judgment for damages caused by a negligent driver. When she sued the driver's automobile liability insurer to compel payment of that judgment, the insurer filed a cross-complaint seeking a declaration that the insurance policy it had issued was void ab initio. The trial court entered judgment for the insurer on both the complaint and the cross-complaint, finding rescission of the insurance policy justified because: (1) the insurer had issued the policy in reliance on a material misrepresentation made by the insured; and (2) the insurer acted promptly to rescind upon discovery of the insured's misrepresentation. (Barrera, supra, 71 Cal.2d at p. 662, 79 Cal.Rptr. 106, 456 P.2d 674.)

In reversing that judgment, Barrera declared: “We conclude that an automobile liability insurer must undertake a reasonable investigation of the insured's insurability within a reasonable period of time from the acceptance of the application and the issuance of a policy. This duty directly inures to the benefit of third persons injured by the insured. Such an injured party, who has obtained an unsatisfied judgment against the insured, may properly proceed against the insurer; the insurer cannot then successfully defend upon the ground of its own failure reasonably to investigate the application.” (Barrera, supra, 71 Cal.2d at p. 663, 79 Cal.Rptr. 106, 456 P.2d 674.)

Barrera's recognition of this duty on the part of automobile liability insurers rested on a combination of three public policy considerations: the quasi-public nature of the insurance business generally; the public policy underlying the Financial Responsibility Law (former § 16000 et seq., added by Stats.1959, ch. 3, p. 1635 et seq.; see now § 16000 et seq., added by Stats.1974, ch. 1409, p. 3096 et seq.); and the fact that such a duty is consistent with the extracontractual duty of all insurers to act promptly to accept or reject applications for insurance. These considerations are discussed below.

The first consideration Barrera addressed was the “ ‘quasi-public’ ” nature of the insurance business and the “insurer's role as a public service entity.” (Barrera, supra, 71 Cal.2d at p. 669, 79 Cal.Rptr. 106, 456 P.2d 674, italics omitted.) As Barrera observed, “the rights and obligations of the insurer cannot be determined solely on the basis of rules pertaining to private contracts negotiated by individual parties of relatively equal bargaining strength.” (Ibid.) In this regard, “[t]he reasonable expectation of both the public and the insured is that the insurer will duly perform its basic commitment: to provide insurance.” (Ibid.) “With respect to an insurance policy voidable under the Insurance Code, if an automobile liability insurer can perpetually postpone the investigation of insurability and concurrently retain its right to rescind until the injured person secures a judgment against the insured and sues the carrier, then the insurer can accept compensation without running any risk whatsoever.” (Id. at p. 670, 79 Cal.Rptr. 106, 456 P.2d 674.) “Furthermore, under such a rule, the carrier would be permitted to deal with the insured as though he were insured, and thus to lead him to believe that he was in fact insured.” (Ibid.)

Barrera next considered the public policy underlying the Financial Responsibility Law. The decision observed that, unlike ordinary indemnity insurance, which primarily protects the insured, the law governing automobile liability insurance was enacted to protect the public, that is, such insurance represents protection “for those who suffer injury or death on the highway from financially irresponsible drivers.” (Barrera, supra, 71 Cal.2d at p. 672, 79 Cal.Rptr. 106, 456 P.2d 674.)

Mindful that the chief purpose of the Financial Responsibility Law is to “ ‘provide compensation for those injured through no fault of their own,’ ” Barrera sought to avoid a rule that, in practice, would (1) produce the “dangerous condition” that car owners and operators would drive with the erroneous belief they are insured, and (2) frustrate the expectation of those using the streets and highways that insurance companies would conduct their business in such a way as to fulfill, not thwart, the law's public policy purpose. (Barrera, supra, 71 Cal.2d at pp. 671–672, 79 Cal.Rptr. 106, 456 P.2d 674.) The only way to meet this latter expectation, Barrera reasoned, was to recognize a duty on the part of automobile liability insurers to undertake a reasonable and timely investigation of insurability and to penalize breach of that duty by loss of the right to rescission. (Id. at pp. 672–673, 79 Cal.Rptr. 106, 456 P.2d 674.)

Finally, Barrera concluded that a duty of investigation for automobile liability insurers would be consistent with a line of decisions imposing an extracontractual duty on all insurers to act promptly to accept or reject applications for insurance. (Barrera, supra, 71 Cal.2d at pp. 673–674, 79 Cal.Rptr. 106, 456 P.2d 674 [citing cases involving life insurers and supplemental disability insurers, among others].) As in the prompt action context, Barrera noted, principles of fairness and sound business practice support such a duty where automobile liability insurance policies are concerned. (Id. at p. 674, 79 Cal.Rptr. 106, 456 P.2d 674.)

In finding that these public policy considerations support a duty to reasonably and timely investigate insurability, Barrera emphasized the duty inures directly to the class of potential victims of the insured. Thus, when an automobile liability insurer “breaches that duty, it may not defeat recovery by the injured person, who has recovered a judgment against the insured, by relying on an untimely attempt to rescind.” (Barrera, supra, 71 Cal.2d at p. 675, 79 Cal.Rptr. 106, 456 P.2d 674.) Significantly, however, the insurer, upon satisfying such a judgment, retains a right to either prosecute a cause of action against the insured for damages for the latter's misrepresentations, or rely on the misrepresentations as a defense in any action by the insured. (Id. at p. 681, 79 Cal.Rptr. 106, 456 P.2d 674; see Pegos, supra, 107 Cal.App.4th at p. 395, fn. 1, 131 Cal.Rptr.2d 866.)”

(Philadelphia Indem. Ins. Co. v. Montes-Harris, supra, 40 Cal.4th at pp. 158–60, emphasis added.)

At the headwater of the arguments over the viability of the Assignment Claims sits the Rescission Judgment. To prevail, Defendant must apply the doctrine of collateral estoppel to foreclose Plaintiff’s ability to proceed on the Assignment Claims. Plaintiff argues Defendant fails in this effort. Plaintiff is correct.

“A party who asserts claim or issue preclusion as a bar to further litigation bears the burden of proving that the requirements of the doctrine are satisfied.” (Hong Sang Market, Inc. v. Peng (2018) 20 Cal.App.5th 474, 489.)[2] This court previously pointed out in response to Defendant’s demurrer that Defendant failed to brief or address the various elements required to collaterally estop Plaintiff from proceeding on the Assignment Claims. Defendant did not heed the court’s warning and once again fails to address the elements required to assert the doctrine of collateral estoppel.

“In order for issue preclusion to apply, the following elements must be met: (1) the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding; (2) the issue must have been actually litigated in the former proceeding; (3) the issue must have been necessarily decided in the former proceeding; (4) the decision in the former proceeding must be final and on the merits; and (5) the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. The “identical issue” requirement addresses whether “identical factual allegations” are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same. An issue is “actually litigated” if it was “properly raised, submitted for determination, and determined in [a] proceeding.” (Williams v. Doctors Medical Center of Modesto, Inc. (2024) 100 Cal.App.5th 1117, 1131–1132 (cleaned up).)

“Where there is doubt about the application of issue preclusion, it should not apply.” (Union Pacific Railroad Co. v. Santa Fe Pacific Pipelines, Inc. (2014) 231 Cal.App.4th 134, 186.” Stated differently, “[i]f ‘anything is left to conjecture as to what was necessarily involved and decided’ there can be no collateral estoppel.” (Eichler Homes, Inc. v. Anderson (1970) 9 Cal.App.3d 224, 234.)

Defendant fails to establish that the issues to be precluded are identical. Instead of doing the work to establish a comparative foundation, Defendant simply skips improperly to the ultimate disposition – rescission. For example, Defendant fails to demonstrate that the elements and defenses as discussed in Barrera, which are central to Plaintiff’s causes of action here, were addressed in the default adjudication. Defendant does not make any effort to establish that issues such as post-claims underwriting or Coast’s obligation to investigate the allege falsity of the insured representations sooner were addressed in the Rescission Judgment action. (See Mitchell v. Jones (1959) 172 Cal.App.2d 580, 586–587 [“[A] default judgment conclusively establishes, between the parties so far as subsequent proceedings on a different cause of action are concerned, the truth of all material allegations contained in the complaint in the first action, and every fact necessary to uphold the default judgment; but such judgment is not conclusive as to any defense or issue which was not raised and is not necessary to uphold the judgment.” (emphasis added.)].)[3]

Defendant fails to meet its threshold burden. Because the Rescission Judgment does not collaterally estop Plaintiff’s Assignment Claims, Defendant’s motion for summary adjudication deflates.[4] While this provides an independent basis to deny summary adjudication, the court, nonetheless, addresses Plaintiff’s collateral attack upon the Rescission Judgment.

Plaintiff argues the Rescission Judgment is void on its face because Coast waived its right to rescind the policy. Coast waived or forfeited its right to rescind the policy because it did not conduct a reasonable investigation as required by Barrera. And this waiver or forfeiture is plain on face of the Rescission Judgment because Coast failed to plead the essential element -- that it conducted a reasonable investigation -- in its Rescission Action.

There is a difference, however, between a void and voidable judgment. “A judgment void on its face because rendered when the court lacked personal or subject matter jurisdiction or exceeded its jurisdiction in granting relief which the court had no power to grant, is subject to collateral attack at any time.” (Rochin v. Pat Johnson Mfg. Co. (1998) 67 Cal.App.4th 1228, 1239.) “‘A collateral attack is an attempt to avoid the effect of a judgment or order made in some other proceeding.’ ” (F.E.V. v. City of Anaheim (2017) 15 Cal.App.5th 462, 471.) A judgment or order is subject to collateral attack if the judgment or order is void on the face of the record or was the product of extrinsic fraud. (Ibid.) “[A] party may collaterally attack a void judgment or order at any time. A judgment or order that is not void but “merely” voidable, however, is generally not subject to collateral attack. When a court has fundamental jurisdiction, but acts in excess of its jurisdiction, its act or judgment is merely voidable. That is, its act or judgment is valid until it is set aside, and a party may be precluded from setting it aside by ‘principles of estoppel, disfavor of collateral attack or res judicata.’ Errors which are merely in excess of jurisdiction should be challenged directly, for example by motion to vacate the judgment, or on appeal, and are generally not subject to collateral attack once the judgment is final unless ‘unusual circumstances were present which prevented an earlier and more appropriate attack.” (Schrage v. Schrage (2021) 69 Cal.App.5th 126, 138 (cleaned up).)

The Rescission Judgment must be void and not merely voidable because the time to set aside or vacate a voidable judgment has passed. (See Lee v. An (2008) 168 Cal.App.4th 558, 563 [holding that a “voidable” judgment cannot be set aside beyond the six-month time limit of Code of Civil Procedure section 473].)

Plaintiff argues the Rescission Judgment is void because the “[f]ailure of the automobile liability insurer reasonably to investigate the insurability of the insured within a reasonable time after issuance of the policy, as described above, results in the loss of the carrier's right to rescind, as opposed to its right to cancel, the policy. Thus, if, in such a case, the insurer has not timely rescinded an automobile liability policy prior to an accident in which the insured negligently injures a third person, the policy necessarily remains in effect at least through the time of the accident; the insurer cannot thereafter rescind, but only cancel the policy.” (Barrera, supra, 71 Cal.2d at p. 681.)(Emphasis added.)

Coast argues the Rescission Judgment is not void because a void judgment involves a lack of subject matter or personal jurisdiction, neither of which the court lacked in entering the Rescission Judgment. Whether to rescind the contract was and is a legal question, not a jurisdictional issue, for the court to consider. Unearthed from Coast’s various points is the contention that a court has the authority to grant a declaratory relief action and rescind a contract even if an essential element of the cause of action is missing. In doing so, the court may have gotten it wrong, but that does not mean the court lacked the jurisdiction to do so.[5]

The court finds the issues have not been adequately briefed or addressed. Coast fails to contend with the main thrust of Plaintiff’s allegations: that Coast did not undertake or provide any evidence of having undertaken a reasonable investigation of Saito’s misrepresentations when seeking rescission of Saito’s automobile policy. Indeed, Coast did not even allege having reasonably investigated Saito’s insurability in the Rescission Action. Barrera unequivocally imposes an affirmative duty upon an automobile insurer to reasonably investigate an insured’s insurability. When that insurer seeks rescission of the policy after the insured causes harm to a third party by negligently operating a vehicle, the insurer must allege it conducted a reasonable investigation. If Coast did not establish having reasonably investigated Saito’s insurability, then Coast lost its right to rescind the policy.

The parties failed to address and brief several issues. Is pleading “reasonable investigation” an essential element to a declaratory relief action to rescind a post-accident insurance policy? If so, did Coast fail to plead an essential element of its rescission cause of action? If Coast were obligated to plead and establish the essential element that it conducted a reasonable investigation, and did not plead the required element, did the court in the Rescission Action have jurisdiction (authority) to declare the policy void ab initio? Or did the court act in excess of its authority? Depending upon the foregoing answers is the Recission Judgment void or voidable? Finally, and independently, can the court, on its own motion, reconsider the Rescission Judgment where the prior judge is no longer available?

The fourth cause of action is a UCL claim. The claim is brought in Plaintiff’s individual and representative capacity. (Complaint, ¶ 107.)[6] She alleges that Coast engaged in unlawful, fraudulent, or unfair business acts or practices by: (a) Collecting insurance premiums from its insureds and issuing policies without conducting investigation into the insurability of the insureds within a reasonable time of policy issuance; (b) Issuing automobile insurance policies to insureds and collecting premiums from the insureds, and then later purporting to rescind those policies after an accident has occurred in which a third party has suffered injury or loss; (c) Rendering its insureds uninsured following rescission, thereby subjecting its insureds to judgments in excess of policy limits; (d) Failing to return all premiums paid when purporting to rescind the policies of its insureds; (e) Violating public policy underlying the Financial Responsibility Law which imposes upon automobile liability insurers a duty both to the insured and to the public to conduct a reasonable investigation of insurability within a reasonable time after issuance of an automobile liability policy. (Complaint, ¶ 113.)

Coast argues this claim fails for lack of standing. Specifically, Plaintiff cannot establish having suffered an economic injury from the alleged unfair or unlawful practice. In support, Coast points to the fact that Plaintiff’s recovery against Coast in the Wrongful Death Action is limited by the policy limit of $15,000 in Saito’s policy. Coast offers evidence that it paid the policy limits with post-judgment interest, albeit belatedly, on October 25, 2023. (See Vaughn Decl., Ex. 1.) Coast meets its initial burden.

The burden shifts. Plaintiff argues she suffered economic injury by incurring attorney fees and costs. Plaintiff does not meet her burden.

The UCL is codified at Business and Professions Code, section 17200 et seq.¿ Section 17204 of the UCL states that a private person “who has suffered injury in fact and has lost money or property as a result of the unfair competition” may bring a 17200 action.¿ (Bus. & Prof. Code, § 17204.)¿ There must be a causal link between the defendant’s conduct and the plaintiff’s injury. (Hall v. Time Inc. (2008) 158 Cal.App.4th 847, 855.) Accordingly, pre-litigation expenses do not establish standing to bring a UCL claim because they are not an economic injury caused by the business practice. (Two Jinn, Inc. v. Government Payment Service, Inc. (2015) 233 Cal.App.4th 1321, 1334.)

Here, Plaintiff identifies only having incurred attorney’s fees and costs in attempting to collect Saito’s policy benefits. (See Ward Decl., ¶ 10.) But attorney fees and costs incurred in the enforcement of a judgment are disconnect from the unfair business practice itself. Plaintiff does not establish standing to bring a UCL claim.

Plaintiff’s lack of standing in her individual capacity is fatal to her representative claim. Any private person bringing an UCL suit must have suffered “injury in fact and ... lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.) A private person may pursue representative claims on behalf of others only if she (1) personally has suffered actual injury and loss caused by the unfair practice and (2) “complies with [s]ection 382 of the Code of Civil Procedure.” (Bus. & Prof. Code, § 17203.) Accordingly, summary adjudication of the fourth cause of action is warranted.

Defendant Coast National Insurance Company’s motion for summary adjudication of the fourth cause of action is GRANTED.

The court will hear from the parties regarding the first, second, and third causes of action

[1] And, to the extent Coast owed a duty to Allison, Coast contends it fulfilled that duty by paying her the policy limits on October 25, 2023. Allison, however, does not bring these claims in her individual capacity.

[2] “Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, precludes relitigation of issues argued and decided in prior proceedings.” (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82 (cleaned up).) Here, the doctrine of collateral estoppel is the better fit.

[3] For example, in the ruling on the demurrer, the court stated that “Defendant has not briefed whether the issues raised by the complaint in this matter were the same issues litigated in the default matter, including any defenses Plaintiff may have had which were not necessary to uphold the judgment, including, among other things: (1) whether Defendant engaged in post-claims underwriting, (2) whether Defendant should have discovered Saito’s misrepresentation sooner, and (3) whether Defendant acted promptly in rescinding the contract. The Court notes that these defenses, which are raised in the complaint now, were not raised by Defendant’s complaint in the default matter. (RJN, Exh. 1.) A default judgment is only conclusive as to matters that were properly pleaded in the complaint. (Maddux, supra, 129 Cal. 665.) As such, Defendant has not met its burden of proving that the requirements of the doctrine are satisfied.” The same is true here.

[4] Plaintiff argues Coast’s reliance on the Rescission Judgment to cut off Defendant’s liability for the Assignment Claims is inconsistent with and undermined by the fact Coast paid off the claim in 2023 and Coast’s Personal Lines Account Underwriter Specialist stated that the policy was in full force and effect at the time of the accident. These facts and defenses were not presented in the Rescission Judgment action. They further cloud the application of the doctrine of collateral estoppel.

[5] Coast also argues any attempt to collaterally attack the Rescission Judgment due to extrinsic fraud fails because any errors were the result of intrinsic rather than extrinsic fraud. Plaintiff ducks the challenge to demonstrate extrinsic fraud in favor of her argument that the Rescission Judgment is void. Given Plaintiff’s preference, the court does not address whether the Rescission Judgment can be set aside due to extrinsic fraud.

[6] Plaintiff does not allege she is pursuing the UCL cause of action as Saito’s assignee. This makes a difference because had she pursued the claim as Saito’s assignee, she may very well have suffered an economic loss – the payment of insurance premiums.