Wednesday, June 23

Procedural Posture

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Appellant brokers sought review of a judgment from the Superior Court of San Diego County (California), which, following a bench trial, awarded respondent insureds restitution on claims under the unfair competition law (UCL), Bus. & Prof. Code, § 17200 et seq., predicated on violations of the California Insurance Code.

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Overview

The insureds alleged unlawful sale of insurance from nonadmitted insurers without a special lines’ surplus lines broker license and without required disclosures. The court held that the brokers could not be liable for restitution under Bus. & Prof. Code, § 17203, of premiums and commissions paid for insurance lawfully placed from admitted carriers. Restitution of premiums paid for nonadmitted coverage could not be ordered because such premiums did not belong to the brokers. The insureds did not lose money or property for purposes of Bus. & Prof. Code, § 17204, when some claims were not paid because damages were not recoverable under the UCL and previously had been released in settling professional negligence actions against the brokers. Ins. Code, § 1764.1, subd. (a)(2), could allow recovery of commissions for nonadmitted coverage, depending on the trial court’s interpretation of the releases on remand. The delayed discovery rule did not apply to a limitations defense under Bus. & Prof. Code, § 17208, because the insureds should have known they did not receive the disclosures. A request to amend under Code Civ. Proc., § 473, subd. (a)(1), was untimely and prejudicial.

Outcome

The court reversed and remanded for further proceedings.

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