Judge: Olivia Rosales, Case: 22NWCV00561, Date: 2022-12-20 Tentative Ruling
Case Number: 22NWCV00561 Hearing Date: December 20, 2022 Dept: SEC
CREDITORS ADJUSTMENT BUREAU, INC. v. QOL SERVICES, INC.
CASE
NO.: 22NWCV00561
HEARING:
12/20/22 @ 10:30 AM
JUDGE: OLIVIA ROSALES
#5
TENTATIVE
RULING
Defendants
QOL Service, Inc. and Inclusive Employment Services’ demurrer is OVERRULED. Defendants are ORDERED to file and
serve its Answer within 10 days.
Opposing
Party to give NOTICE.
Defendants QOL Service, Inc. and Inclusive
Employment Services (collectively, “QOL”) demurs to the 1st – 4th
causes of action on the grounds that the court lacks subject matter
jurisdiction and the doctrine of primary jurisdiction.
The Complaint alleges that Plaintiff’s Assignor, State
Compensation Insurance Fund (“SCIF”), is owed a debt of $126,614.14,
$32,374.77, and $241,582.44 on three workers compensation insurance policies
that SCIF provided to Defendants QOL Services, Inc. and Inclusive Employment
Services. Based thereon, the Complaint
asserts causes of action for:
1.
Breach
of Contract
2.
Open
Book Account
3.
Account
Stated
4.
Reasonable
Value
PRIMARY
JURISDICTION
The primary jurisdiction doctrine
"applies where a claim is originally cognizable in the courts, and comes
into play whenever enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the special competence of
an administrative body; in such case the judicial process is suspended
pending referral of such issues to the administrative body for its views
(Farmers Insurance Exchange v. Superior Court (1992) 2 Cal.4th 377,
390.) ''No rigid formula exists for
applying the primary jurisdiction doctrine." (Farmers, supra, at p.
391.) It "advances two related policies: it enhances court decisionmaking
and efficiency by allowing courts to take advantage of administrative
expertise, and it helps assure uniform application of regulatory laws." (Farmers,
supra, at p. 391.) Thus, courts have invoked the doctrine where the Insurance
Commissioner "has at his disposal 'a pervasive and self-contained system
of administrative procedure' to deal with the precise questions" raised by
the complaint and where the "resolution of these questions mandates
exercise of expertise presumably possessed by the Insurance Commissioner, and
poses a risk of inconsistent application of the regulatory statutes if courts
are forced to rule on such matters without benefit of the view of the agency
charged with regulating the insurance industry." (Farmers, supra,
at pp. 396, 398.)
The Insurance Commissioner is best
suited to initially determine whether the “regulations pertaining to
eligibility have been faithfully adhered to by an insurer." (Id. at p. 399; see also Jonathan Neil
& Associates, Inc. v. Jones (2004) 33 Cal.4th 917, 931-932 - “Primary jurisdiction”… applies where a
claim is originally cognizable in the courts, and comes into play whenever enforcement of the
claim requires the resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an administrative body; in such a
case the judicial process is suspended
pending referral of such issues to the administrative body for its views.”) The
court stays the proceedings and refers the issues to the Department of
Insurance. (Jonathan Neil & Associates, Inc. v. Jones (2004) 33
Cal.4th 917, 935.)
Judicial Notice is taken of the Matter
of Appeal of A-Brite Blind & Drapery Cleaning (Ex. 3), Michael Reynolds Enterprise, Inc. v. State
Compensation Insurance Fund and American Jetter & Plumbing, Inc. v.
State Compensation Insurance Fund (Exs. 4-5) cases.
"[I]n determining whether it is
appropriate to issue a stay of judicial proceedings in order to permit
administrative action under the primary jurisdiction doctrine" the court
must confine its analysis "to the complaint as written." (Farmers, supra, at p. 398.) Although Defendant contends that SCIF used
the same erroneous modifier as in the A-Brite administrative action, this
fact does not appear on the face of the Complaint in this action. Unlike Reynolds (19STCV05738) and Jetter
(19STCV36307), where the Complaints specifically allege irregularities in
SCIF’s tier modifiers, the complaint in this action was filed by Creditors
Adjustment Bureau, Assignor of SCIF, for contract damages. The Complaint alleges legally sufficient
contract claims.
Accordingly, QOL’s demurrer cannot
be sustained based on the primary jurisdiction doctrine because the Complaint,
as written, alleges legally sufficient claims.
Thus, the demurrer is OVERRULED.
QOL has not filed a Cross-Complaint
or Answer, alleging SCIF’s erroneous modifier calculations. Once these factual allegations appear on the
face of the pleadings in this court, QOL may bring a motion to stay based on
the primary jurisdiction doctrine.
Defendants are ORDERED to file and
serve their Answers within 10 days.