MANNY VILLANUEVA et al. v. FIDELITY NATIONAL TITLE COMPANY
H041870, H042504
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SIXTH APPELLATE DISTRICT
Filed 9/7/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
MANNY VILLANUEVA et al., Plaintiffs and Appellants, v.
H041870, H042504
(Santa Clara County Super. Ct. No. 1-10-CV173356)
In their first appeal (case No. H041870), both plaintiff Manny Villanueva, individually and as class representative, and defendant Fidelity National Title Company (Fidelity) appeal from a judgment following a bench
mail and courier services and some of the draw deed fees were unlawful because they were not included in Fidelity’s rate schedules. The court granted Plaintiffs injunctive relief under the UCL, but denied their restitution claims.
On appeal, Plaintiffs contend the trial court erred in failing to award them restitution under the UCL and by granting judgment on the pleadings on their breach of fiduciary duty claim. In its appeal, Fidelity argues the trial court lacked subject matter jurisdiction over this action because section 12414.26 confers exclusive original jurisdiction over ratemaking on the Insurance Commissioner and this case involves ratemaking. Plaintiffs respond that Fidelity waived its immunity defense by limiting it to certain claims below. Fidelity also argues the named class representative lacked standing. Fidelity contends that under the statutory scheme it was required to file rates only for services it provided and not for services provided by third parties. It argues other allegedly unlawful charges were authorized by the Insurance Code and the trial court erred by enjoining past acts that are not likely to be repeated.
We will conclude Fidelity’s immunity defense (§ 12414.26) is not subject to the forfeiture doctrine because it implicates the court’s subject matter jurisdiction. We will also hold that this civil action is barred by the immunity in section 12414.26 and is subject to the exclusive original jurisdiction of the Insurance Commissioner because it challenges Fidelity’s ratemaking-related activity. We will therefore reverse the judgment.
In their second appeal (case No. H042504), Plaintiffs challenge the trial court’s post-judgment order denying their motion for attorney fees under the private attorney general attorney fees doctrine (Code Civ. Proc., § 1021.5). In that same appeal, Fidelity challenges the trial court’s order awarding costs to Plaintiffs and granting Plaintiffs’ motion to tax Fidelity’s costs.
attorney fees. We will therefore affirm the trial court’s order denying Plaintiffs’ motion for attorney fees. In light of our conclusion on the merits, we will also reverse the trial court’s order awarding Plaintiffs their costs, direct the court to enter a new order awarding costs to Fidelity, and remand to the trial court to determine the amount of the costs award.
FACTS AND PROCEDURAL HISTORY
I. State Regulation of Title Insurance; Fidelity’s Role
The California Insurance Commissioner has general regulatory authority over the business of title insurance. (Ins. Code, § 12340 et seq.; Cal. Code Regs., tit. 10, §§ 2355.1-2355.5.) The “[b]usiness of title insurance,” as defined in the Insurance Code, includes in relevant part: “The performance by a title insurer, an underwritten title company or a controlled escrow company of any service in conjunction with the issuance or contemplated issuance of a title policy including but not limited to the handling of any escrow, settlement or closing in connection therewith; or the doing of or proposing to do any business, which is in substance the equivalent of any of the above.) (§ 12340.3, subd. (c); italics added.) The Insurance Code also defines “ ‘[t]itle insurer,’ ” “ ‘underwritten title company,’ ” and “ ‘[c]ontrolled escrow company.’ ” (§§ 12340.4, 12340.5, 12340.6.) We will discuss the statutory regulatory scheme in greater detail in the “Discussion” portion of this opinion. Because the State of California regulates the business of title insurance, California title insurers are subject to very little regulation by the federal government. (Greenwald & Asimow, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2017) ¶¶ 3:61, pp. 3-17 to 3-18 (Greenwald), citing 15 USC App. §§ 1011-1015 [McCarran-Ferguson Insurance Regulation Act] & Commander Leasing Co. v. Transamerica Title Ins. Co. (10th Cir. 1973) 477 F.2d 77, 83, 89 [title
insurance companies are exempt from federal anti-trust laws when their business is regulated by the state where the alleged violation occurred].)
Fidelity is a subsidiary of Fidelity National Financial (FNF), which operates Fidelity and its other subsidiaries through the Fidelity National Title Group (FNTG). Fidelity has been licensed by the California Department of Insurance (DOI) to transact business as an underwritten title company since at least January 1996 in 21 California counties. Prior to that, beginning in November 1978, it was licensed as an underwritten title company to do business in Los Angeles County. The Insurance Code defines an underwritten title company as “any corporation engaged in the business of preparing title searches, title
The Insurance Code requires title insurers, underwritten title companies, and controlled escrow companies to file their “schedules of rates, all regularly issued forms of title policies to which such rates apply, and every modification thereof which [they] propose[] to use in this state” with the Insurance Commissioner and to “establish basic classifications of coverages and services to be used as the basis for determining rates.” (§§ 12401.1, 12401.2.) In this litigation, Villanueva alleges—on behalf of himself and a class of similarly situated persons—that Fidelity violated the Insurance Code when it charged for certain services that were not listed on its schedule of rates filed with the Insurance Commissioner.
II. Facts Regarding the Named Plaintiff’s Escrow
The named plaintiff is Manny Villanueva. In 2006, Villanueva and his wife Sonia Villanueva refinanced the mortgage on their home in Santa Clara County. The refinance loan was arranged by mortgage broker UMG Mortgage. UMG Mortgage arranged for FNTIC to provided title insurance and for Fidelity to provide escrow services. Sonia
Villanueva was the sole borrower. She is not a party to this action. Although Mr. Villanueva was not a party to the loan agreement, he did sign the escrow instructions. (Hereafter, we shall refer to Manny Villanueva using the singular “Villanueva,” to Sonia Villanueva by her complete name, to Manny and Sonia Villanueva jointly as “the Villanuevas.”)
Among other things, the refinance transaction involved: (1) obtaining a new loan from First Federal Bank of California (First Federal); (2) paying off a first mortgage with Countrywide Home Loans, (3) paying off a second mortgage with Chase Home Finance, and (4) paying various fees, which left (5) a balance of $116,238.69 that was paid to the Villanuevas.
The Villanuevas incurred several expenses in connection with refinancing their mortgage, including payments to the new lender (First Federal), the mortgage broker, the homeowners’ insurance carrier, the title insurer (FNTIC), escrow fees to Fidelity, and other fees. Fidelity charged the Villanuevas a base rate of $250 to handle their escrow. In addition to the base rate, Fidelity charged certain fees that are the subjects of this lawsuit, including a document preparation fee ($75), a “Draw Deed” fee ($50), an overnight delivery
This litigation concerns the legality of amounts paid for delivery services and the “draw deed” fee. In their escrow instructions, the Villanuevas “authorize[d] and instruct[ed] [Fidelity] to charge each party to the escrow for their respective Federal Express, special mail handling/courier and/or incoming/outgoing wire transfer fees” and to “select special mail/delivery or courier service to be used.” In the estimated closing statement, which was part of the escrow instructions, Fidelity estimated the escrow charges would include $30 for overnight delivery and $30 for “Outside Courier/Special Messenger.”
The Villanuevas’ escrow closed on May 31, 2006. Fidelity arranged for three deliveries to be made while the transaction was in escrow. The first delivery was via overnight mail by California Overnight from the Fidelity office in Milpitas to First Federal Bank in Los Angeles on May 23, 2006 (eight days before close of escrow). The Villanuevas’ final escrow closing statement on the HUD-1 form4 dated May 31, 2016,
charging improper fees for services the defendants never intended to perform and charging fees that greatly exceeded the actual cost of the service, including fees for delivery services.
The terms of the stipulated judgment included an injunction permanently enjoining the defendants from, among other things, “[b]illing or collecting from title insurance or escrow customers an amount that exceeds the actual cost to defendants of services provided by third parties in connection with defendants’ performance of escrow and title services, such as overnight mail, courier, and notary services, unless (1) such practice is permitted by state and federal law and (2) defendants clearly and conspicuously disclose that they have marked-up [sic] the third party charge.” The stipulated judgment also provided for restitution, including cash payments to former customers and up to $26 million in the form of $20 discounts on future transactions to certain eligible customers.
lists a fee of $11.20 for this delivery. Five days after closing, California Overnight billed Fidelity $4.60 for this delivery.
The third delivery was made by First Courier (also referred to as Tri-Valley Courier) from the Fidelity office in Milpitas to mortgage broker UMG Mortgage in Milpitas at close of escrow on May 31, 2006. First Courier charged $15 for this delivery. It was listed as $15 for “Outside courier/Special Messenger” on the Villanuevas’ final escrow closing statement.
III. Fidelity’s Rate Filings
The evidence at trial included several the rate manuals (also described as “rate schedules” or “rate filings”) that Fidelity filed with the DOI with effective dates between May 2006 and August 2013. The schedule of rates governing the Villanuevas’ transaction is set forth in Fidelity’s rate manual entitled “Escrow Fees and Charges for the State of California,” effective May 22, 2006. The escrow rate tables in the rate manual are organized by counties. According to the manual, “[f]or escrows involving the refinancing of an existing deed of trust on a one-to-four [sic] family residence,” in Santa Clara County, the charge shall be $250 on transactions up to and including $1 million.
settlement services such as credit reports, appraisal fees, recording fees, wire transfer fees, and other loan related services.” (Washington Mutual Bank v. Superior Court (1999) 75 Cal.App.4th 773, 776.) RESPA requires lenders throughout the nation to use a standard uniform settlement statement form at the time of settlement, or closing, which is known as the “HUD-1 form.” (Id. at p. 776, 779.)
The schedule provided that “[f]or the purpose of this section only, ‘Refinance Escrow Services’ shall include the following services: (a) ordering demands and making payoffs on up to two (2) previous loans by either check or wire transfer; (b) disburse balance of proceeds, by either check or wire transfer, to up to 4 payees; and (c) company-performed in office document signing of one set of loan documents; and (d) standard in-house courier services. Refinance Escrow services do not include notary fees, . . . recording fees, transfer tax or other governmental fees or charges.” The schedule also lists nine “Refinance Related Services,” which are described as charges “[i]n excess of escrow services included in the above[-]referenced paragraphs” The nine services listed include “Document Preparation” at $75 per document, but not delivery or courier services by outside vendors like FedEx, California Overnight, or First Courier. The
IV. Pretrial Procedural History
Villanueva’s class action complaint alleges Fidelity engaged in unlawful conduct by charging him and others for delivery services and draw deed fees that were not listed on Fidelity’s rate filings with the Insurance Commissioner. Villanueva’s original complaint, filed in May 2010, contained causes of action for violations of the Unfair Competitor Law (UCL) (Bus. & Prof. Code, § 17200 et seq.), fraud, negligent misrepresentation, negligence, unjust enrichment, money had and received, and breach of fiduciary duty. It also contained a prayer for punitive damages. The named defendants included Fidelity (the escrow company), FNTIC (the title insurer), and Fidelity National Title Company of California (FNTC-CA) (hereafter jointly “Defendants”).
Defendants filed demurrers to the original and the first amended complaints. The papers in support of and opposing both demurrers, as well as the orders on the demurrers, are not in the record. According to the statement of decision after trial, the trial court sustained the demurrers to the causes of action for fraud, negligence, and negligent misrepresentation in the original complaint with leave to amend. Villanueva elected not to amend his cause of action for negligence and did not include that claim in his first amended complaint. As for the demurrer to the first amended complaint, the trial court sustained the demurrers to the causes of action for fraud and negligent misrepresentation with leave to amend and overruled the demurrers to the other causes of action. Villanueva elected not to amend the complaint.
Defendants filed their answer in December 2011. In 2012, Villanueva dismissed the action without prejudice as to FNTC-CA and FNTIC, which left Fidelity as the only named defendant.
In February 2013, the Court certified a class of “ ‘[a]ll persons for whom [Fidelity] performed residential escrow services in a transaction that occurred in California, and who were charged for courier, overnight, messenger, or other delivery services and/or draw deed fees in connection with that transaction, during the period May 28, 2006 through September 30, 2012.’ ” For ease of reference, we shall sometimes refer to the overnight mail, messenger, courier, and other delivery services jointly as “delivery services.”
In September 2013, Fidelity filed a motion for judgment on the pleadings challenging Plaintiffs’ common law claims for unjust enrichment, money had and received, and breach of fiduciary duty, but not the UCL claim. The trial court granted the motion with leave to amend. Plaintiffs elected not to amend their complaint. On appeal,
Plaintiffs challenge the trial court’s order granting judgment on the pleadings on the breach of fiduciary duty claim only.
In February 2014, the court denied Fidelity’s separate motion for judgment on the pleadings on the UCL claim. When the case went to trial, the only remaining cause of action was the UCL claim (Bus. & Prof. Code, § 17200 et seq.). The court conducted a bench trial in the complex litigation department over 16 days in April, May, and June 2014.
V. Evidence Presented and Theories of Liability Argued at Trial
At trial, Plaintiffs argued two alternate theories of liability related to alleged unlawful charges for delivery services. They sought injunctive relief and requested approximately $13.1 million in restitution for third party delivery services. Plaintiffs also alleged Fidelity’s “ ‘draw deed’ ” fees were unlawful and sought approximately $10.7 in restitution for the draw deed fees.5 A subset of the class sought $1.8 million in restitution for draw deed fees on an alternative theory of liability.
A. Delivery Theory No. 1
Plaintiffs’ Delivery Theory No. 1—which the trial court and the parties also described as the “ ‘unfiled rate’ claim”—posited that the charges for delivery services provided by third parties were unlawful because Fidelity was required to file its rates for third party delivery services with the DOI and those rates were not included in Fidelity’s rate filings. Fidelity contended the Insurance Code does not require it to file rates for “[p]ass [t]hrough” delivery fees that it collects from its customers and passes through to third party delivery service providers. Fidelity argued that the Insurance Code requires it
to file rates only for services “it performs” (§ 12340.7) and that it was not required to file rates for delivery services performed by others.
B. Delivery Theory No. 2
Alternatively, Plaintiffs’ Delivery Theory No. 2—also described as the “ ‘double charge’ claim”—asserted that the charges for delivery services were unlawful because they were part of the services included in Fidelity’s base rate—which the parties also refer to as a “bundled rate”—and that by charging both the base rate and separate fees for delivery, Fidelity billed its customers twice for the same service. Fidelity disagreed with Plaintiffs’ interpretation of the language in its rate filings that Plaintiffs relied on as the basis for Delivery Theory No. 2.
C. Draw Deed Theory
A subset of plaintiffs—which the trial court referred to as the “ ‘Draw Deed Plaintiffs’ ”—argued that Fidelity could not charge its filed rate for “ ‘document preparation’ ” for preparing a deed if the customers’ HUD-1 closing statement described the service as “ ‘draw deed’ ” instead of “ ‘document preparation.’ ” Plaintiffs sought restitution of approximately $10.7 million under this theory. We shall hereafter refer to this claim as the General Draw Deed Theory.
Plaintiffs asserted an alternative theory of liability with regard to a subset of the Draw Deed Plaintiffs whose escrows involved real estate sale transactions (as opposed to
refinance transactions) between May 28, 2006 and February 2, 2008—which the trial court referred to as the “ ‘Gap Period Plaintiffs.’ ” The Gap Period Plaintiffs contended that Fidelity’s rate filings during that period did not include a rate for “ ‘document preparation’ ” for real estate sales transactions. They argued that Fidelity’s failure to have filed a rate for document preparation for sales transactions made their charges for drawing a deed unlawful even if Fidelity’s filed rate for “ ‘document preparation’ ” authorized draw deed charges in other instances. The Gap Period Plaintiffs sought approximately $1.8 million in restitution.6
After Plaintiffs’ opening statement, Fidelity made three motions for nonsuit, one of which was based on its statutory immunity defense (§ 12414.26). The trial court denied each of the motions.
The court issued its final statement of decision in November 2014. The court concluded that the delivery services were made in connection with Fidelity’s handling of the class members’ escrows. It found that delivery of escrow funds and documents was a “necessary” and “integral” part of an escrow holder’s function, even if accomplished by using third party delivery services. The court reasoned that the delivery fees were expenses Fidelity incurred to carry out “a core part of” its function as escrow holder, that Fidelity—and not the class members—contracted with the delivery companies and was obligated to pay them, that the delivery fees were not “ ‘pass-through’ ” charges and were therefore charges by Fidelity. Construing section 12414.27, the court found the statute was not ambiguous and that its plain language broadly prohibits Fidelity from charging for any service that does not match its rate filings, including delivery services. The court
held that the legislative history of the statutory scheme, the purpose of the statutory scheme, and the DOI’s interpretation of the statute all supported its conclusions.
On Plaintiffs’ Delivery Theory No. 1, the court found that Fidelity violated section 12414.27 by charging for delivery services because its rate filings did not include a rate for such service or a general statement that the rate would be that charged by a third party delivery service. In light of its conclusion, the court did not reach the merits of Delivery Theory No. 2.
Regarding the General Draw Deed Theory, the court rejected Plaintiffs’ assertion that drawing a deed was different from document preparation. The court found that statistical evidence presented at trial substantiated Fidelity’s testimony that its regular practice was to charge the document preparation rate, regardless of whether the service was labelled as “ ‘document preparation’ ” or “ ‘draw deed’ ” on the HUD-1 form. The court found that Fidelity’s rate filings during the Gap Period (May 28, 2006, to February 2, 2008) “for sale/resale transactions (as contrasted with refinance transactions) did not include a rate for either . . . drawing a deed or document preparation” and that during that time, “Fidelity charged $1,800,973 in draw deed fees. [(Fns. omitted.)]” The court rejected Fidelity’s assertion that those fees were “unusual services” within the meaning of section 12401.8. The court held “that charging for drawing a deed was unlawful during the Gap Period,” but that Fidelity “did not violate the law by charging for the service of drawing a deed outside the Gap Period.”
The court also rejected Fidelity’s statutory immunity claim under section 12414.26 and found that the statute did not immunize Fidelity from suit based on its unlawful charges.
With regard to remedies, the court found that although Plaintiffs had established legal violations by Fidelity, they had failed to prove they were entitled to restitution. The court reasoned that Plaintiffs “received the benefit of their bargain” and noted they did not contend that the services were unwarranted, “unsatisfactory, or unfairly priced, and all of the services and rates were disclosed up-front and agreed to by Plaintiffs.” The court concluded that (1) Plaintiffs benefitted from Fidelity’s preparation of deeds and its negotiation of low third party delivery service fees that were lower than those charged by other escrow holders; (2) the fees were disclosed to and approved by Plaintiffs in their estimated closing statements; (3) Plaintiffs failed to show economic injury as a result of omissions from rate manuals they neither reviewed nor relied on; and (4) awarding restitution would “put Plaintiffs in a better position than they expected to receive.”
Although it denied restitution, the court concluded that Plaintiffs were entitled to injunctive relief. While Fidelity’s most recent rate filings included rates for delivery services, the court found it was “appropriate to enjoin Fidelity from charging for the service of delivery unless its rate filing includes the charge or a statement that the rate will be the amount charged by the third party vendors for delivery fees.”
VII. Motions for Attorney Fees and Costs
In January 2015, Plaintiffs filed a motion for attorney fees under Code of Civil Procedure section 1021.5, which codifies the private attorney general attorney fee doctrine. (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1217-1218.) Plaintiff
sought $9,439,929 in attorney fees based on the work of nine lawyers in two different law firms.7
Code of Civil Procedure section 1021.5 provides in relevant part: “Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, . . . , are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.” The trial court concluded that Plaintiffs were not entitled to attorney fees under Code of Civil Procedure section 1021.5. The court reasoned that although the litigation involved an important right affecting the public interest, Plaintiffs had not met their burden of establishing the significant benefit element or that private enforcement was necessary or that the necessity and financial burden of private enforcement were such as to make the award appropriate. Thus, the court denied Plaintiffs’ motion for attorney fees.
In December 2014, both sides filed a memorandum of costs. Plaintiffs sought $393,862.19 in costs and Fidelity claimed $197,839.41 in costs. Both parties filed motions to tax the other side’s costs. The trial court concluded that since the only relief Plaintiffs obtained was an injunction and they had not obtained any monetary relief, it had discretion under Code of Civil Procedure section 1032, subdivision (a)(4) to determine which party was the prevailing party, whether costs should be awarded, and in what amount. The court concluded that Plaintiffs were the prevailing party and awarded
them the entire amount claimed as costs. Consequently, the court denied Fidelity’s motion to tax Plaintiff’s costs and granted Plaintiffs’ motion to tax Fidelity’s costs.
PARTIES’ CONTENTIONS
Both sides appeal the judgment and the post-judgment order denying Plaintiffs’ motion for attorney fees and awarding costs to Plaintiffs. In their appeal on the merits, Plaintiffs do not challenge the trial court’s ruling on Delivery Theory No. 2 or its ruling regarding the Draw Deed charges outside the Gap Period. Only the rulings on Delivery Theory No. 1 and the Draw Deed claims of the Gap Period Plaintiffs are at issue here. Plaintiff
In its appeal on the merits, Fidelity argues that the judgment must be reversed because the trial court lacked subject matter jurisdiction for two independent reasons. First, Fidelity contends it was immune from suit under section 12414.26, which it argues consigns all issues regarding filed rates to the discretion of the Insurance Commissioner and prohibits courts from second-guessing Fidelity’s filed rates. Second, Fidelity contends Villanueva, the named class representative, lacked standing because he was not the borrower and paid no fees related to his wife’s loan transaction.
Fidelity contends that even if the court had jurisdiction over the subject matter of the action, the judgment on Delivery Theory No. 1 must be reversed because the trial court misinterpreted and misapplied section 12414.27. Fidelity argues section 12414.27 required it to file rates for services it provided and did not require it to file rates for delivery services provided by third parties. Fidelity contends the judgment on the claims of the Gap Period Plaintiffs must be reversed because the charges were authorized as
excess charges by section 12401.8. It also asserts the trial court erred by enjoining past acts that are not likely to be repeated.
As for the postjudgment order on attorney fees and costs, Plaintiffs appeal the trial court’s order denying their motion for attorney fees. Fidelity challenges the court’s order awarding costs to Plaintiff and granting Plaintiffs’ motion to tax Fidelity’s costs.
DISCUSSION8
I. Brief Introduction to Statutory Scheme Governing Title Insurance
The statutory scheme at issue in this appeal is found in division 2 of the Insurance Code, which is entitled “Classes of Insurance.” We are concerned
Notes
Second, Plaintiffs argue substantial evidence supports the trial court’s implied finding that Fidelity’s charges were not made in accordance with its rate filings. Rather than cite the evidence that supports the finding, Plaintiffs cite the court’s statement of decision, which contains the court’s findings. The statement of decision is not evidence. (See Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 178, fn.4 [citation to the separate statement, rather than the evidence, in a summary judgment appeal is inadequate; a separate statement is not evidence; assertions of fact in appellate briefs “should be followed by a citation to the page(s) of the record containing the supporting evidence”].)
We shall ignore statements in the briefs that are unsupported by appropriate record citations or that improperly cite the statement of decision. Since we decide this case based on questions of law and statutory interpretation, these deficiencies in the briefs are not dispositive.
Chapter 1, is divided into 16 articles. Although we will discuss the entire statutory scheme, we are concerned primarily with statutes in five of those articles: (1) article 1, which contains pertinent definitions (§§ 12340 to 12342); (2) article 5.5, which is entitled “Rate Filing and Regulation” (§§ 12401 to 12401.10); (3) article 5.7, which is entitled “Advisory Organizations” (§§ 12402 to 12402.2); (4) article 6.7, entitled “Hearings, Procedure, and Judicial Review” (§§ 12414.13 to 12414.19); and (5) article 6.9, entitled “Examinations, Penalties, and Miscellaneous” (§§ 12414.20 to 12414.31). (Stats. 1973, ch. 1130, pp. 2300, 2307, 2309, 2311, 2313.) For ease of reference, we shall refer to chapter 1 of part 6 of division 2 of the Insurance Code, the statutory scheme governing title insurance, as “Chapter 1” or “Chapter 1 (Title Insurance).”
Chapter 1 refers to three types of regulated entities in the business of title insurance: title insurers, underwritten title companies, and controlled escrow companies; (See e.g., §§ 12340.7, 12401.1, 12401.2, 12401.3, subd. (c), 12401.7, 12414.27; see also §§ 12340.4 to 12340.6 [defining “title insurer,” “underwritten title company,” and “ ‘[c]ontrolled escrow company’ ”].) We will refer to all three types of entities jointly as “regulated title entities.” Since Fidelity is an underwritten title company and for ease of reference, we will sometimes delete references to title insurers, controlled escrow companies, and advisory organizations, as well as insurance coverages provided by title insurers when describing the Insurance Code sections at issue.
II. General Principles Under the Unfair Competition Law
“The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as ‘any unlawful, unfair or fraudulent business act or practice.’ (
‘courts with broad equitable powers to remedy violations’ [citation].” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 320, citing Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 181 (Cel-Tech) and Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266 [“The Legislature intended this ‘sweeping language’ to include ‘ “anything that can properly be called a business practice and that at the same time is forbidden by law.” ’ ”].) The UCL “governs ‘anti-competitive business practices’ as well as injuries to consumers, and has as a major purpose ‘the preservation of fair business competition.’ ” (Cel-Tech, at p. 180.)
Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three types of unfair competition: acts or practices that are (1) unlawful, or (2) unfair, or (3) fraudulent. (Cel-Tech, supra, 20 Cal.4th at p. 180.) “ ‘ “In other words, a practice is prohibited as ‘unfair’ or ‘deceptive’ even if not ‘unlawful’ and vice versa.” ’ ” (Ibid.) Plaintiffs pleaded their UCL claim “under the unlawful prong of the statute on behalf of approximately half a million people.”
As we have noted, “ ‘[u]nlawful business activity’ proscribed under [Business and Professions Code] section 17200 includes ‘ “anything that can properly be called a business practice and that at the same time is forbidden by law.” ’ [Citation.] . . . ‘[In] essence, an action based on Business and Professions Code section 17200 to redress an unlawful business practice “borrows” violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under [Business and Professions Code] section 17200 et seq. and subject to the distinct remedies provided thereunder.’ ” (Farmers Ins. Exchange v. Superior Court (1998) 2 Cal.4th 377, 383.) The UCL claim in this case is based on alleged violations of the Insurance Code provisions governing the business of title insurance.
In evaluating Plaintiffs’ UCL claims, we review questions of law and statutory interpretation de novo. (People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 432.) We review the trial court’s resolution of disputed factual issues “for
substantial evidence, viewing the record in the light most favorable to the ruling.”. (People ex rel. Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 514.)
We begin with the jurisdictional questions raised by Fidelity’s appeal, including the application of statutory immunity.
III. Fidelity’s Appeal in Case No. H041870: Statutory Immunity
Section 12414.26 provides: “No act done, action taken, or agreement made pursuant to the authority conferred by Article 5.5 . . . 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.” Fidelity contends it is immune from suit under
Plaintiffs contend Fidelity has forfeited its immunity defense by limiting it to Delivery Theory No. 2 and the General Draw Deed claims in the trial court. On the merits of the immunity issue, Plaintiffs argue both the plain language of
A. Background
The trial court first addressed the immunity question in its ruling on Fidelity’s motion for nonsuit following Plaintiffs’ opening statement. The court’s tentative ruling on the motion for nonsuit, which it later adopted, stated: “Article 5.5 pertains to ‘Rate Filing and Regulation.’ Acts done or taken pursuant to the authority conferred by Article 5.5 include filing a schedule of rates with the commissioner (
basic classifications of coverages and services to be used as the basis for determining rates (
In its statement of decision, the trial court wrote: “[S]ection 12414.26 does not immunize Fidelity from suit for its unlawful charges. Section 12414.26 confers immunity for an ‘act done, action taken, or agreement made pursuant to the authority conferred by Article 5.5 . . . .’ Section 12414.26 does not apply because Article 5.5 did not authorize the unlawful charges. Nothing in Article 5.5 authorizes the charges for a service other than in accordance with the rate filings.”
B. Waiver/Forfeiture
Plaintiffs contend Fidelity waived its immunity defense with regard to Delivery Theory No. 1 because Fidelity’s motion for nonsuit expressly limited its immunity defense to Delivery Theory No. 2 and the Draw Deed claims. Generally, trial court error is waived by implication or deemed forfeited when the appellant fails to bring the alleged error to the trial court’s attention by timely motion or objection. (Doers v. Golden Gate Bridge, Highway & Transportation Dist. (1979) 23 Cal.3d 180, 184-185, fn. 1; In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 826.)
Fidelity responds that it did not forfeit its immunity defense as to any of Plaintiffs’ theories of liability. It argues that although its written motion for nonsuit briefed the
immunity defense as to only Delivery Theory No. 2 and the Draw Deed claims, at the oral argument on the motion, Fidelity’s counsel argued that immunity applied to all of Plaintiffs’ claims. Alternatively, Fidelity argues that since the immunity affects the trial court’s subject matter jurisdiction, the issue has not been waived or forfeited. We shall not address Fidelity’s first point because its second point resolves the forfeiture question.
In the absence of subject matter jurisdiction, a court has no power to hear or determine a case. (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 196.) The existence of subject matter jurisdiction is a question of law, which we review de novo. (Robbins v. Foothill Nissan (1994) 22 Cal.App.4th 1769, 1774.) Issues affecting the trial court’s subject matter jurisdiction are never forfeited and can be asserted for the first time on appeal, at any stage of the appellate process. (Consolidated Theatres, Inc. v. Theatrical Stage Employees Union, Local 16 (1968) 69 Cal.2d 713, 721 (Consolidated Theatres) [whether action arising out of labor dispute was within exclusive jurisdiction of NLRB]; San Joaquin County Human Services Agency v. Marcus W. (2010) 185 Cal.App.4th 182, 187-188 [“lack of fundamental jurisdiction is not subject to the forfeiture doctrine”]; In re Marriage of Oddino (1997) 16 Cal.4th 67, 73 [issue of subject matter jurisdiction raised for first time in petition for review “must be addressed”].)
The questions whether the immunity in
C. Standard of Review
Whether this action is barred by the statutory immunity in
D. Rules of Statutory Construction
“In construing a statute, our fundamental task is to ascertain the Legislature’s intent so as to effectuate the purpose of the statute. [Citation.] We begin with the language of the statute, giving the words their usual and ordinary meaning. [Citation.] The language must be construed ‘in the context of the statute as a whole and the overall statutory scheme, and we give “significance to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose.” ’ [Citation.] In other words, ‘ “we do not construe statutes in isolation, but rather read every statute ‘with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness.’ [Citation.]” ’ [Citation.] If the statutory terms are ambiguous, we may examine extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.] In such circumstances, we choose the construction that comports most closely with the Legislature’s apparent intent, endeavoring to promote rather than defeat the statute’s general purpose, and avoiding a construction that would lead to absurd consequences. [Citation.]” (Smith v. Superior Court (2006) 39 Cal.4th 77, 83 (Smith).)
E. Statutory Scheme Governing Regulated Title Entities
The California Supreme Court has observed that “in some instances, an action may not lie under the UCL because another statutory scheme provides the exclusive means for resolving disputes.” (Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, 1126 (Loeffler).) As examples of such statutory schemes, the Loeffler court cited the exclusive remedy provision of the workers’ compensation law and two statutory schemes in the Insurance Code involving insolvent insurers and casualty insurance rates. (Id. at pp. 1126-1127, citing Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 811–812 [workers compensation exclusive remedy,
Fidelity argues the
business of title insurance,” including “the making and use of the rate filings and the agreements to pay fees” (italics added). Fidelity interprets the immunity too broadly.
The Insurance Code contains a comprehensive scheme for the regulation and enforcement of entities and persons engaged in the business of title insurance. (See summary at 12 Witkin, Summary of Cal. Law (11th ed. 2107) Real Property, § 367, pp. 423-424.) Excluding the definitions in article 1, Chapter 1 (Title Insurance) is divided into 15 articles that regulate various aspects of the business of title insurance. Under Chapter 1, title insurers must maintain financial stability (
items connected with an escrow, the disbursement of funds from escrow accounts, and interest on escrow fund deposits (
Although the statutory scheme regulates a broad range of activity in the business of title insurance, the
F. The Authority Conferred by Article 5.5
As we have noted,
When enacted, article 5.5 of Chapter 1 was expressly entitled “Rate Filing and Regulation.” (Stats. 1973, ch. 1130, p. 2307.) The purpose of article 5.5 “is to promote the public welfare by regulating rates for the business of title insurance as herein
provided to the end that they shall not be excessive, inadequate or unfairly discriminatory.” (
Section 12401.1 provides in relevant part: “Every . . . underwritten title company . . . shall file with the commissioner its schedules of rates, . . . and every modification thereof which it proposes to use in this state. . . . Every filing shall set forth its effective date, which shall be not earlier than the 30th day following its receipt by the commissioner, and shall indicate the character and extent of the coverages and services contemplated.”
Section 12401.3 contains detailed standards that “apply to the making and use of rates” under article 5.5. It repeats the purpose of the statutory scheme that “[r]ates shall not be excessive or inadequate, . . . nor shall they be unfairly discriminatory” and, among other things, defines when a rate is “excessive” or “inadequate.” (
Section 12401.8 specifies the circumstances under which rates “in excess of those set forth in a rate filing which has become effective” may be used.10
Unlike other types of insurance, title insurance rates need not be approved by the insurance commissioner prior to their use. (See
Dwayne Buggage, who was an analyst in the DOI’s rate filing bureau for more than 20 years, testified at trial. He explained that in regulating the business of title insurance, the DOI accepts regulated title entities’ filed rates, but does not approve them. As an analyst, he reviews the filings “to make sure that they make sense at least to [him].” He looks for ambiguity in the rates, “to see if there’s more than one rate set for one risk” and to “make sure that . . . the rates are not excessive or inadequate or discriminatory,” which is consistent with the purposes of article 5.5. After he completes his review and analysis, the rate filings are reviewed by his bureau chief. Rate filings may be accepted or rejected by the DOI or withdrawn by the filer. If rejected, it is usually because the filing is incomplete. If Buggage rejects a rate filing, he sends a letter to the filer explaining the deficiency. The filer will either (1) address the deficiency and resubmit the rate schedule or (2) request a hearing before an administrative law judge to contest the DOI’s decision.
G. Case Law Interpreting Section 12414.26 and Analogous Immunity Statutes
We turn next to the case law interpreting
The only published California case that discusses the immunity in
refuse to sell title insurance on certain types of property, and not ratemaking activity, it was not barred by the
Two federal district court cases have discussed the
In State Compensation Insurance Fund v. Superior Court (2001) 24 Cal.4th 930 (SCIF), the California Supreme Court construed
Workers’ Compensation Insurance Rating Bureau. As a result, the insureds’ experience modifications were artificially inflated, which allowed SCIF to collect excessive premiums from the insureds. (Id. at pp. 933-934, 936.) The parties disputed whether the case involved ratemaking. (Id. at p. 936.) “While the question [was] close,” the Supreme Court concluded that the plaintiff’s allegations related to SCIF’s misconduct before it sent the data to the rating bureau and did not “challenge the method by which the rate or premium charged was set, but rather the insurer’s misallocation of certain expenses,” and, that
The parties rely on cases that construe the immunity provision in
The court in Walker considered a civil action by a putative class of auto insurance customers against more than 70 auto insurers and the Insurance Commissioner alleging four causes of action, including a UCL claim, based “on the insurers’ charging approved rates alleged nevertheless to be ‘excessive.’ ” (Walker, supra, 77 Cal.App.4th at pp. 752-
753.) The court observed that “[h]istorically, [
One issue in Walker was whether the changes “wrought” by Proposition 103 affected the immunity provision in
In Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, a policyholder sued his automobile insurer under the UCL alleging the insurer improperly used his lack of prior insurance as a criterion to determine insurability, the amount of his premium, and eligibility for two discounts. The court held the UCL action was not barred because it did not involve a challenge to approved rates but instead involved how the components of the insurer’s class plan were applied to the public. (Id. at pp. 991-993.)
The plaintiff in Krumme v. Mercury Ins. Co. (2004) 123 Cal.App.4th 924, 928, 936 (Krumme), filed a UCL action challenging the practice of three related insurers of selling auto and other personal lines of insurance through brokers who were actually the insurers’ agents but charged broker fees. The plaintiff complained that the broker fees were not disclosed to the DOI or in the insurers’ comparative premium rate advertising and alleged that since the insurers’ rates failed to disclose that they would be charged broker fees, the premiums appeared deceptively low. (Id. at p. 932.) The defendants argued that if the allegedly illegal broker fees were part of the premium it charged, the matter came within the Insurance Commissioner’s plenary authority over rates and premiums. The appellate court concluded the case did not involve ratemaking, since the plaintiff alleged the insurers violated provisions of the Insurance Code regulating brokers and engaged in false advertising. (Id. at pp. 936-937.)
The court in Krumme explained: “The elaborate statutory and administrative process for setting rates has ‘been interpreted to provide exclusive original jurisdiction over issues related to ratemaking to the commissioner.’ (Walker, supra, 77 Cal.App.4th 750, 755.) The Insurance Code does not, however, displace the UCL ‘except as to . . . activities related to rate setting.’ (Quelimane, supra, 19 Cal.4th 26, . . . ; see Walker, at p. 759.) . . . ‘A judicial act constitutes rate regulation only if its principal purpose and direct effect are to control rates. . . . In general, a claim that directly challenges a rate and seeks a remedy to limit or control the rate prospectively or retrospectively is an attempt to regulate rates,’ but ‘a claim that directly challenges some other activity, such as false
advertising . . . is not rate regulation.’ [Citation.] A claim predicated on a violation of the Insurance Code not related to ratemaking may thus be framed as a claim under the UCL. [Citation.]” (Krumme, supra, 123 Cal.App.4th at pp. 936-937.)
The plaintiffs in MacKay, brought a class action lawsuit alleging violations of the UCL against 21st Century Insurance. They alleged they paid increased premiums due to a lack of prior insurance and that the defendant used two impermissible factors to determine auto insurance rates that were based on the lack of prior insurance: accident verification and persistency. (MacKay, supra, 188 Cal.App.4th at pp. 1433-1434.) The parties in MacKay disputed whether accident verification had been approved by the DOI as a rating factor. (Id. at pp. 1435-1436.) The court reviewed the history of the rate filings and a DOI enforcement action against the insurer and held that accident verification had been approved by the DOI as a rating factor in that case. (Id. at pp. 1436-1439.) The court concluded that the DOI’s prior approval of the rating factor precluded a civil action challenging it, the UCL claim was barred by the immunity in
In summary, the cases hold that the immunity provisions in the Insurance Code (
advertising (Krumme, supra, 123 Cal.App.4th at pp. 936-937); misallocating medical-legal expenses in reports submitted to the WCIRB (SCIF, supra, 24 Cal.4th 932, 942, 944); violating statutes that regulate insurance brokers (Krumme, at p. 936-937); and charging illegal rebates, kickbacks, and commissions (In re Cal. Title Ins. Antitrust Litigation, supra, 2009 U.S. Dist. LEXIS 103407).
H. Analysis
Quelimane instructs that the immunity applies to “ratemaking-related activities”; we must therefore determine whether the conduct at issue here is “related to ratemaking.” (Quelimane, supra, 19 Cal.4th at p. 46.) As the cases illustrate, whether the action is barred by statutory immunity turns on the wrong alleged.
In our view, this case is more like the cases that involved activities related to ratemaking than those that did not. Plaintiffs do not allege a conspiracy to refuse to provide title insurance (Quelimane, supra, 19 Cal.4th 44-46, 51); false advertising (Krumme, supra, 123 Cal.App.4th at pp. 936-937); misallocating or misrepresenting information in a report to an advisory agency (SCIF, supra, 24 Cal.4th 932, 942, 944); violating statutes that regulate insurance brokers or title insurance representatives (Krumme, at p. 936-937;
Applying
Fidelity was billing them twice. The general Draw Deed Theory argued that drawing a deed was not the same as “document preparation” for which there was a filed rate. These theories required the court to interpret Fidelity’s rate filings to determine whether they encompassed the charges at issue. This was a challenge to the rates as filed by Fidelity. Since these theories challenged the “basic classifications of . . . services [Fidelity established] to be used as the basis for determining rates” (
The more difficult question is whether the immunity applies to Plaintiffs’ Delivery Theory No. 1 and the Draw Deed Theory of the Gap Period Plaintiffs. The gravamen of these claims is that Fidelity charged for delivery services and some draw deed services that it did not include in its rate filings and that were therefore not accepted by the Insurance Commissioner. Alternatively, the claim may be framed as Fidelity’s failure to include in its rate filings amounts it charged for third party delivery services and some draw deed fees. Broadly speaking, these claims appear to be related to Fidelity’ rate-making activities.
Furthermore, the primary legal issue under Delivery Theory No. 1 is whether Fidelity was required to file a rate for delivery services performed by third party vendors. The trial court concluded it was and Fidelity challenges that finding on appeal. Generally speaking, the question whether a regulated title entity is required to include the cost of services performed by third parties in its rate filings appears to be related to ratemaking activity.
We conclude Plaintiffs’ challenge to charges or rates that were not listed in Fidelity’s rate filings fall within the authority conferred by article 5.5. The statues in article 5.5 directed Fidelity to establish basic classifications of services to use as the basis for determining its rates (
I. Statutory Scheme Governing Insurance Commissioner’s Exclusive Original Jurisdiction Over Rate Making-related Activity
In construing
business of title insurance and
The statutes governing the Insurance Commissioner’s exclusive original jurisdiction over the business of title insurance are found in article 6.7 of Chapter 1, which is entitled “Hearings, Procedure, and Judicial Review.” (
More specifically, the statutory scheme provides that “[a]ny person aggrieved by any rate charged, rating plan or rating system followed or adopted by a [regulated title entity] may request such person or entity to review the manner in which the rate, plan, system, or rule has been applied . . . .” (
The statutory scheme sets forth the powers of the commissioner upon finding a violation or finding the violation was willful or finding the regulated entity has not complied with the commissioner’s orders in the matter. (
In addition to reviewing complaints by aggrieved persons, the Insurance Commissioner may investigate ratemaking activity on his or her own initiative. The commissioner “may, . . . , make or cause to be made an examination of every” regulated title entity “to ascertain whether such person or entity and every rate and rating system used in the business of title insurance complies with the requirements and standards of Article 5.5 (commencing with
The Insurance Code defines the term “ ‘rate’ ” or “ ‘rates’ ” as used in Chapter 1 as “the charge or charges, . . . , made to the public by [a regulated title entity], for all services it performs in transacting the business of title insurance.”14 (§ 12340.7, italics added.) By its express language, section 12414.13—which governs informal requests for review and complaints and requests for hearing to the Insurance Commissioner—applies to grievances based on “any rate charged” by a regulated title entity. The statute’s use of the phrase “any rate charged” in addition to “rating plan or rating system” indicates it applies to any charge, and not just rates or charges that are included in a rating plan or rating system (i.e., schedule of rates) that has been accepted by the Insurance Commissioner.
Section 12414.13 empowers the Insurance Commissioner to act when a “complaint charges a violation of Article 5.5.” Similarly, section 12414.14 empowers the Insurance Commissioner to act when “any rate, rating plan or rating system made or used” by a regulated title entity does not comply with the requirements and standards of Article 5.5” and section 12414.21 empowers the Insurance Commissioner to ascertain whether “every rate and rating system” complies with article 5.5. (Italics added.) Thus, the statutes governing administrative review of rates support the conclusion that the Insurance Commissioner’s plenary authority over ratemaking extends to “any rate charged” and “every rate” not just the rates set forth in a rate filing that has been accepted by the Insurance Commissioner. Plaintiffs allege Fidelity failed to comply with article 5.5 by charging rates for services that were not listed in its rate filings and failing to include rates for third party delivery services and some document preparation in its rate filings. The statutes in article 6.7 of Chapter 1, particularly sections 12414.13, 12414.14, and 12414.21, expressly provide that Plaintiffs’ claims fall within the exclusive original jurisdiction of the Insurance Commissioner. Thus, article 6.7of Chapter 1 supports our conclusion that this case is barred by the immunity in section 12414.26.
J. Effect of Section 12414.27 on Immunity Conferred by Section 12414.26
1. Language of Section 12414.27
Plaintiffs contend the conduct at issue here is expressly excluded from the section 12414.26 immunity for ratemaking-related activity by the language of section 12414.27. Fidelity argues section 12414.27 does not limit the immunity.
Section 12414.27 provides: “Commencing 120 days following January 1, 1974, no [regulated title entity] shall charge for any title policy or service in connection with the business of title insurance, except in accordance with rate filings which have become effective pursuant to Article 5.5 . . . or as otherwise authorized by such article; provided, however, where a rate is on file with the commissioner and in effect immediately prior to such date, such rate shall continue in effect until a new rate filing is thereafter made and becomes effective in the manner provided in Article 5.5 . . . of this chapter.”
Plaintiffs argue section 12414.27 prohibits the conduct at issue in this case: charging for services for which there has been no rate filing. Plaintiffs argue a violation of section 12414.27 cannot be immunized by section 12414.26 because the section 12414.26 immunity applies to “act[s] done, action[s] taken, or agreement[s] made pursuant to the authority conferred by Article 5.5” and section 12414.27 is in article 6.9, not article 5.5. They argue that if the Legislature had intended to provide a broad immunity that applies to any fees charged, even those for which no rate has been filed, it would not have enacted section 12414.27 or placed it in article 6.9 to which the section 12414.26 immunity does not apply.
Fidelity advocates another interpretation and urges us to read section 12414.27 as “the grace period or savings statute the Legislature intended.” Fidelity argues: “[h]aving established new rate regulation in article 5.5, the Legislature needed an implementing statute to govern when new requirements take effect, and what happens with rates already on file under the old law.” It contends the Legislature drafted section 12414.27 as a miscellaneous procedural statute and placed it in article 6.9 for that reason. Fidelity argues the first clause in section 12414.27—which states “[c]ommencing 120 days following January 1, 1974”—“expressly provides a grace period to adjust to the new law, by postponing the operative date of Article 5.5’s rate regulation.” Fidelity adds that the “second clause simply means that if title insurers were already using rates on file, they did not have to re-file them under Article 5.5.”
Thus, the question presented is whether section 12414.27 is a prohibitory statute that carves out an exception to the section 12414.26 immunity or an implementing statue that establishes an operative date for the rate filing and regulatory scheme in article 5.5. Section 12414.27 does contain prohibitory language. It states: “no [regulated title entity] shall charge for any . . . service . . . , except in accordance with rate filings that have become effective . . . .” Although the Legislature placed section 12414.27 directly after the immunity provision in section 12414.26 and outside article 5.5, section 12414.27 does not mention section 12414.26 or otherwise indicate an intent to modify the scope of the immunity provided by section 12414.26.
The interpretation advanced by Plaintiffs does not take into account the first clause of section 12414.27: the words “[c]ommencing 120 days following January 1, 1974.” (§ 12414.27.) A brief review of the statute’s history helps illuminate the language of the first clause. The statutory scheme at issue was enacted in 1973; it amended, repealed, and added several provisions to the Insurance Code. (Stats. 1973, ch. 1130, pp. 2300-2315.) The Legislation was signed by the Governor on October 2, 1973 and took effect on January 1, 1974. (Stats. 1973, ch. 1130, p. 2300; Gov. Code, § 9600.) The timing of the enactment supports the conclusion that the legislative intent behind section 12414.27 was to delay the operative date of the rate filing regulatory scheme in the new legislation. In other words, although the statutory scheme took effect on January 1, 1974, section 12414.27 provides that the rate filing and regulatory provisions of article 5.5 would not be operative until 120 days after the effective date of the new legislation.
“It has long been recognized that a statute may legally be framed to provide for an effective date and an operative date. [Citations.] In the usual situation, the effective date and the operative date are one and the same; however, the power to enact laws includes the power to fix a future date on which the act will become operative. [Citation.]” (Estate of Rountree (1983) 141 Cal.App.3d 976, 980.) “The Legislature may provide for an operative date subsequent to the effective date of a statute to allow persons affected to become acquainted with and implement its provisions, as well as to give lead time to the governmental authorities to establish machinery for the operation of or implementation of the new law.” (Id. at p. 980, fn. 3.)
2. Legislative History of Section 12414.27
The legislative history of section 12414.27 supports the conclusion that the Legislature’s intent was to delay implementation of the new statutory scheme, not to limit the immunity provision in section 12414.26. The statutes at issue were enacted by Senate Bill No. 1293, which was introduced in May 1973 at the request of the California Land Title Association. (Enrolled Bill Memo to Gov. for Sen. Bill No. 1293 (1993-1994 Reg. Sess.)15 Sept. 30, 1973; Sen. Final Hist. (1973-1974 Reg. Sess.), p. 568.)
According to the Assembly Committee on Finance and Insurance analysis, the bill proposed “to regulate the organization and rate making of title insurance companies, underwritten title companies, and controlled escrow companies. It requires that the rates be subject to the same tests [that were] applied to other types of insurance by the MacBride-Grunsky Rating Law. This requires that the rates not be inadequate nor excessive nor unfairly discriminatory. [¶] Rates, as established by the individual companies or by rating organizations, would be filed with the Insurance Commissioner who would have the right to review such rates. Procedures are provided for the review of the rates and for administrative and judicial hearing if rates are found to be in violation of the rating act. [¶] Under current statutory law, rates of title insurance companies are not regulated. . . . [This bill] would subject future rating of title insurance policies to review by the Insurance Commissioner and thus permit the use of rating organizations which could be used to develop rates to be made available to the members of the rating organization.” (Assem. Com. on Finance and Insurance, Analysis of SB 1293, as amended Aug. 27, 1973, italics added.)
The bill was amended three times. (Assem. Amend. to SB 1293 Sept. 10, 1973, p. 1.) When originally proposed, the legislation did not include either section 12414.26 or section 12414.27. (SB 1293 as introduced May 3, 1973, pp. 28-30.) Instead, the original bill contained a Section 20, which provided: “The Legislature finds and declares that the changes in the law affecting the business of title insurance made by this act constitute a major departure from preexisting law and that compliance with this act will require the formulation, adaptation and implementation of new regulatory and business practices by the Insurance Commissioner and persons and entities engaged in the business of title insurance in this state. In order to promote the public welfare and to assure an orderly method of transition from the requirements of preexisting law to compliance with the requirements of this act the Legislature hereby directs that the provisions of this act be implemented in the following manner.” (SB 1293 as introduced May 3, 1973, at p. 31.)16 Section 20 then set forth a proposed schedule of three staggered operative dates for implementing the new legislation and specified which statutes would become operative on each date. By the first date, the Insurance Commissioner was to promulgate certain regulations and forms. By the second date, the newly regulated title entities were to file their schedules of rates. (Ibid.)
Section 12414.27 was added to the bill by amendment in August 1973; the language of the statute has not changed since then. (Assem. Amend. to SB 1293 Aug. 27, 1973, p. 22.) As we have noted, it provides: “Commencing 120 days following January 1, 1974, no [regulated title entity] shall charge for any title policy or service in connection with the business of title insurance, except in accordance with rate filings which have become effective pursuant to Article 5.5 . . . or as otherwise authorized by such article; provided, however, where a rate is on file with the commissioner and in effect immediately prior to such date, such rate shall continue in effect until a new rate filing is thereafter made and becomes effective in the manner provided in Article 5.5 . . . .”
The August 1973 amendment also deleted Section 20, the uncodified provision that described the need for an “orderly method of transition” and provided for staggered operative dates. (Assem. Amend. to SB 1293 Aug. 27, 1973, pp. 36-37.) The Legislature replaced the staggered schedule in Section 20 with a single, delayed operative date for rate filings and replaced the 60-day grace period in Section 20 with a 120-day grace period after the legislation’s operative date for regulated entities to get their rates on file. Rather than keep these provisions in an uncodified section of the bill, the Legislature added a statute (§ 12414.27) that expressly set forth the delayed operative date for the rate filing requirement and provided that after that date no regulated title entity shall charge for any service except in accordance with its rate filings.
Prior to 1974, the DOI regulated title insurers and underwritten title companies through licensing, setting minimum capital requirements, and reviewing audits. Title insurers were required to file their rates with the DOI, but the DOI did not regulate their rates. (Legis. Analyst, Analysis of SB 1293, Sept. 11, 1973, p. 1.) And there was no rate filing requirement for underwritten title companies or controlled escrow companies. This history supports the conclusion that the Legislature also intended by the language of section 12414.27 to authorize title insurers to use the rates already on file with the Insurance Commissioner after the new legislation took effect.17
We conclude, based on the language of the statute and this legislative history, that the purpose of section 12414.27 was to establish a delayed operative date for regulated title entities to prepare for the new statutory scheme and comply with the article 5.5 rate filing requirements and not to carve out an exception to immunity for cases such as this.
Moreover, while section 12414.27 expressly prohibits charging for services “except in accordance with rate filings which have become effective pursuant to Article 5.5 . . . or as otherwise authorized by such article,” that same conduct is also impliedly prohibited by the language of sections 12401.1, 12401.2, and 12401.7. As we have observed, sections 12401.1 and 12401.2 required Fidelity to establish classifications of services to be used as the basis for its rates, file its schedules of rates with the Insurance Commissioner, and indicate in its rate filings the character and extent of the services contemplated. (§§ 12401.1, 12401.2.) Section 12401.7 prohibited Fidelity from using any rate prior to its effective date or prior to the rate filing with respect to that rate having been publicly displayed and made readily available for 30 days prior to its effective date. (§ 12401.7.) Here, Fidelity failed to establish classifications of services for draw deed services for sales transactions during the Gap Period and for third party delivery services. It also failed to indicate in its rate filings that it intended to charge for those services and used rates before they were included in a rate filing. By charging for such services, Fidelity has violated sections 12401.1, 12401.2, and 12401.7, which are in article 5.5. Thus, its conduct was subject to the section 12414.26 immunity.
For these reasons, we conclude the section 12414.26 immunity applies to Plaintiffs’ UCL claims and that the immunity bars this action. Plaintiffs “may not bring a UCL action for restitution” or any other cause of action in a civil proceeding “that ‘trespasses directly on the core function of the [Insurance] Commissioner’ ” concerning rate filing and regulation in the business of title insurance. (See Loeffler, supra, 58 Cal.4th at pp. 1126-1127.)
Plaintiffs are not left without a remedy. Article 6.7 of Chapter 1 describes the procedures for bringing this matter before the Insurance Commissioner. In its order on the attorney fees motion, the trial court observed that the Villanuevas did not present any evidence of any “presuit efforts to contact governmental authorities concerning public enforcement before filing a lawsuit.” The court added, “[I]t appears to be undisputed that Plaintiff did not attempt to contact the [DOI] prior to initiating the lawsuit. Plaintiff argues that no action had been taken by the [DOI] and the [DOI] could not have sought restitution as Plaintiff did. The fact that the [DOI] did not take action prior to the filing of Plaintiff’s lawsuit does not necessarily mean the [DOI] would not have taken action had Plaintiff made such a request. Action by the [DOI] could have resulted in a much more efficient resolution of the issues raised in this action.” Under article 6.7 of Chapter 1, the Insurance Commissioner has exclusive original jurisdiction over Plaintiffs’ claims. That the Insurance Commissioner had not acted on his or her own initiative or could not seek restitution is not relevant to the jurisdictional analysis.
In light of our conclusion on the immunity issue, we shall not address the parties’ other arguments in case No. H041870, except to note that immunity bars “civil proceedings.” (§ 12414.26.) This includes Plaintiffs’ cause of action based on an alleged breach of fiduciary duty.
IV. Appeals of Postjudgment Orders in Case No. H042504
Both parties appeal the postjudgment order on attorney fees and costs. Plaintiffs contend the trial court erred when it denied their motion for attorney fees under Code of Civil Procedure section 1021.5, the private attorney general attorney fees statute. Fidelity argues the trial court erred when it awarded costs to Plaintiffs, denied Fidelity’s motion to strike or tax Plaintiffs’ costs, and granted Plaintiffs’ motion to tax Fidelity’s costs in their entirety.
A. Order Denying Plaintiffs’ Motion for Attorney Fees Under Code of Civil Procedure Section 1021.5
“[A] party seeking an award of Code of Civil Procedure section 1021.5 attorney fees must first be determined to be ‘a successful party.’ [Citation.] A necessary prerequisite to recovery under the statute is the status of the prevailing party. [Citation.] The terms ‘prevailing party’ and ‘successful party’ are synonymous. (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 570 . . . .)” (Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa (2015) 238 Cal.App.4th 513, 521.) Since we reverse the judgment, Plaintiffs are no longer a prevailing party and therefore cannot recover attorney fees under Code of Civil Procedure section 1021.5. (Ibid.)
An order awarding attorney fees and costs “falls with a reversal of the judgment on which it is based” and “must also be reversed.” (Merced County Taxpayers’ Ass’n v. Cardella (1990) 218 Cal.App.3d 396, 402 (Merced County), citing Purdy v. Johnson (1929) 100 Cal.App. 416, 421.) In this case, the trial court entered an order denying Plaintiffs’ motion for attorney fees, reasoning that they had not met the requirements of Code of Civil Procedure section 1021.5. Since the trial court denied Plaintiffs’ motion for attorney fees, albeit for reasons unrelated to the reversal of the judgment, we will affirm the order. “ ‘[W]e review the trial court’s order, not its reasoning, and affirm an order if it is correct on any theory apparent from the record.’ ” (Wal-Mart Real Estate Business Trust v. City Council of San Marcos (2005) 132 Cal.App.4th 614, 625, quoting Blue Chip Enterprises, Inc. v. Brentwood Sav. & Loan Assn. (1977) 71 Cal.App.3d 706, 712.) In addition, the reversal of the judgment renders Plaintiffs’ challenge to the order denying their motion for attorney fees moot. (Merced County, at pp. 401-402.) Consequently, we will not address the parties’ arguments on the motion for attorney fees further.
B. Order on Parties’ Motions to Tax Costs
Like orders awarding attorney fees, “[a]n order awarding costs falls with a reversal of the judgment on which it is based.” (Merced County, supra, 218 Cal.App.3d at p. 402.) Because we conclude that the judgment in favor of Plaintiffs must be reversed, the order awarding them costs must also be reversed. (County of Humboldt v. McKee (2008) 165 Cal.App.4th 1476, 1501, citing Merced County, at p. 402.)
Since we reverse the judgment and order the action dismissed, Fidelity is “a defendant in whose favor a dismissal is entered” under Code of Civil Procedure section 1032 and is therefore a prevailing party, “entitled as a matter of right to recover costs” in this action. (Code Civ. Proc., § 1032, subds. (a)(4), (b).)
The record is incomplete regarding the litigation of the costs claims.18 However, Plaintiffs’ appendix contains a copy of the superior court’s “On-line Document List,” which serves as the register of actions. (Cal. Rules of Court, rules 8.124(b)(1)(A), 8.122(b)(1)(F) [appendix must contain all items required to be included in a clerk’s transcript, including the “register of actions, if any”].) According to that list, Plaintiffs filed a motion to tax Fidelity’s costs, Fidelity opposed the motion, and Plaintiffs filed a reply. Since those papers are not in the record on appeal, we do not know what arguments Plaintiffs raised below. More importantly, that motion was never adjudicated on the merits in the trial court. The trial court concluded Plaintiffs were the prevailing party and awarded costs to Plaintiffs. It also found Fidelity was not a prevailing party and granted Plaintiffs’ motion to tax Fidelity’s costs on that ground. We will therefore remand this matter to the trial court to rule in the first instance on Plaintiffs’ motion to tax Fidelity’s costs and determine the amount of the costs award.
DISPOSITION
The judgment in case No. H041870 is reversed. The cause is remanded to the superior court with directions to vacate the judgment and enter a new judgment dismissing the action since it is barred by the section 12414.26 immunity.
The postjudgment order denying Plaintiffs’ motion for attorney fees in case No. H042504 is affirmed. The postjudgment order denying Fidelity’s motion to tax Plaintiffs’ costs, awarding Plaintiffs their costs of suit, and granting Plaintiffs’ motion to tax Fidelity’s costs is reversed. The cause is remanded to the superior court with directions to vacate its order awarding costs to Plaintiffs, to enter a new order awarding Fidelity its costs of suit, and to conduct a hearing on Plaintiffs’ motion to tax Fidelity’s costs.
The parties shall bear their own costs on appeal.
_________________________________
ELIA, J.
WE CONCUR:
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PREMO, Acting P. J.
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GROVER, J.