Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County No. 06CC00012, Thierry Patrick Colaw, Judge.
Callahan, McCune & Willis, Robert W. Thompson, and Douglas A. Wright for Plaintiff and Appellant.
Sheppard, Mullin, Richter & Hampton, Brian M. Daucher, and Yael Karabelnik for Defendant and Respondent.
OPINION
IKOLA, J.
Plaintiff Jennifer Simas appeals from the judgment dismissing her case with prejudice after the court sustained the demurrers of defendant Public Storage, Inc., to plaintiffs’ (1) unfair competition cause of action under Business and Professions Code section 17200 et seq. (UCL) in her first amended complaint, and (2) unjust enrichment cause of action in her second amended complaint. For the reasons explained below, we conclude the court properly sustained defendant’s demurrer to (1) plaintiff’s UCL claim because plaintiff failed to allege sufficient facts to support her standing to bring the claim, and (2) plaintiff’s unjust enrichment claim because it was based on alleged Insurance Code violations for which no private right of action exists and because plaintiff received the benefit of the bargain.
All statutory references are to the Business and Professions Code unless otherwise stated.
Solely for purpose of assignment to the same panel, we have deemed this appeal to be related to Peterson, et al. v. Cellco Partnership, G038728.
FACTS
In her first amended complaint, plaintiff brought a class action against defendant alleging five causes of actions, including claims for unfair business practices under the UCL and unjust enrichment. Plaintiff alleged that (1) defendant “is a self-service storage facility as defined in California Insurance Code section 1758.91”; (2) defendant offered and sold “storage insurance to its tenants at all of its storage facilities”; (3) “plaintiff rented a storage unit” and bought storage insurance from defendant; and (3) a percentage of each insurance premium paid by defendant’s tenants was retained or received by defendant “as a fee, commission, profit . . . or other form of monetary benefit.” Plaintiff further alleged defendant lacked a license (required under Insurance Code section 1758.7) to offer or sell such insurance.
The history of the pleadings that preceded plaintiff’s first amended complaint is as follows: The original complaint included a single cause of action for defendant’s alleged violation of the UCL. Defendant demurred to the original complaint, inter alia, on the basis plaintiff lacked standing to bring a UCL claim. Plaintiff chose not to oppose the demurrer to the original complaint and instead filed her first amended complaint.
In her UCL cause of action, plaintiff alleged defendant violated the UCL by, inter alia, offering and selling insurance while unlicensed to do so. Plaintiff alleged she had standing to bring the claim because: (1) she “suffered injury in fact because defendant . . . unlawfully retained . . . or received a percentage of the storage insurance premium paid by plaintiff as a fee, commission, profit . . . or monetary benefit, all of which plaintiff has a legally protected ownership interest in that is concrete, particularized and actual”; (2) plaintiff “lost money” because defendant retained a percentage of the premium and the money was “no longer in plaintiff’s possession”; and (3) plaintiff “suffered injury in fact and lost money to defendant as a direct result of defendant’s unlawful activities because if defendant had not offered [and] sold . . . insurance when it was not . . . licensed to do so, plaintiff would not have purchased the . . . insurance and would not have paid the monthly . . . premium to defendant.”
In her unjust enrichment cause of action, plaintiff alleged defendant was “unjustly enriched by the payment of the fees, commissions, profits or other forms of monetary benefits because defendant did not maintain the required license . . . to offer . . . or sell . . . insurance . . . and . . . unlawfully retained . . . or received the money paid by plaintiff . . . .”
Plaintiff prayed, inter alia, for restitution of all funds acquired by defendant in violation of the UCL and “of all ill-gotten gains that have unjustly enriched defendant at the expense of plaintiff.”
Defendant demurred to the first amended complaint, arguing, inter alia, plaintiff’s UCL claim failed to state a cognizable claim for relief because: (1) under section 17204, as amended by Proposition 64, a private plaintiff has standing to bring a UCL claim only if he or she “‘has suffered injury in fact and has lost money or property as a result of such unfair competition,’” (2) plaintiff failed “to allege any facts showing that she suffered a monetary loss, or any type of loss or injury,” and (3) plaintiff “does not dispute that she received exactly the insurance coverage that she decided to purchase at the time she agreed to pay,” and therefore received “what she paid for.” As to plaintiff’s unjust enrichment claim, defendant’s demurrer alleged plaintiff failed to state a cause of action because plaintiff “has not alleged that she did not receive value in exchange for the insurance premium she paid.”
The court sustained, with leave to amend, demurrers to all causes of action except the unjust enrichment claim. Subsequently, in light of a ruling in a related case (Peterson, et al. v. Cellco Partnership, G038728), the parties stipulated to the court’s entering an order for judgment on the pleadings with leave to amend, in favor of defendant and against plaintiff, on “the sole remaining cause of action [for] unjust enrichment” on the ground the “Insurance Code [does not provide a] private right of action.”
Plaintiff then filed a second amended complaint alleging solely an unjust enrichment cause of action, once again relying on Insurance Code section 1758.7’s prohibition against a self-service storage facility offering or selling insurance without a license, and claiming defendant was “unjustly enriched by the payment of the fees, commissions, profits, or other forms of monetary benefit because defendant . . . was not authorized to receive . . . or accept [such payments] as a result of the offer, sale . . . or transaction of storage insurance [and] failed to maintain the proper license . . . .”
Defendant demurred to the second amended complaint, arguing the unjust enrichment claim failed to state a cause of action because plaintiff based her claim “on allegations that [defendant] violated Insurance Code Sections 1758.7 et seq. . . . for which there is no private right of action” and because plaintiff failed to allege facts showing that defendant had been unjustly enriched. Defendant noted plaintiff had stipulated “to judgment on the pleadings” on the first amended complaint’s unjust enrichment claim on the basis “there is no private right of action under the California Insurance Code (now law of the case).” Defendant argued the “wrongfulness of every act alleged in the [second amended complaint] arises solely from obligations allegedly imposed by California Insurance Code Section 1758.7 et seq.”
The court sustained, without leave to amend, defendant’s demurrer to plaintiff’s second amended complaint, stating: “[Plaintiff’s] claim for unjust enrichment is based upon the Insurance Code for which there is no private right of action. The alleged acts pleaded in the [Second] Amended Complaint derive solely from the provisions of [Insurance Code sections 1758.7 et seq.]”
Plaintiff has not challenged, either here or below, the court’s refusal to grant leave to amend her unjust enrichment claim in the second amended complaint.
The court dismissed plaintiff’s case with prejudice.
DISCUSSION
Standard of Review
In evaluating a trial court’s order sustaining a demurrer, we review the complaint “de novo to determine whether it contains sufficient facts to state a cause of action.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In doing so, we accept as true all properly pleaded material facts, as well as facts that may be implied from the properly pleaded facts (Montclair Parkowners Assn. v. City of Montclair (1999) 76 Cal.App.4th 784, 790), and we also consider matters that may be judicially noticed (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6). We do not assume the truth of contentions, deductions or conclusions of fact or law. (Ibid.) The plaintiff “bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law” and “must show the complaint alleges facts sufficient to establish every element of [the] cause of action.” (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) “Because standing goes to the existence of a cause of action, lack of standing may be raised by demurrer . . . .” (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 813.)
The Court Properly Sustained Defendant’s Demurrer to Plaintiff’s UCL Claim
Plaintiff contends her first amended complaint “alleged facts sufficient to establish standing to bring her UCL claims,” arguing (1) her alleged payment of an “unlawful commission . . . represents a distinct and palpable ‘injury in fact’ sufficient to provide standing for her UCL claims”; (2) she alleged “facts showing she lost money as a result of [defendant’s] illegal business practice”; and (3) she “alleged facts demonstrating the causal connection between [defendant’s] unlawful business practice and the ‘lost money.’” Alternatively, she argues “that a violation of the . . . Insurance Code creates a cause of action for unfair business practices.”
The UCL prohibits, inter alia, “any unlawful, unfair or fraudulent business act or practice . . . .” (§ 17200.) In order to give substance to this prohibition, a UCL action “‘borrows’ violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices . . . .” (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383.) Here, plaintiff’s UCL claim was predicated on allegations defendant violated the Insurance Code by selling storage insurance without a license.
Defendant demurred to plaintiff’s UCL cause of action for lack of standing. Section 17204 of the UCL governs a plaintiff’s standing to assert a UCL claim. (§§ 17204, 17203.) Prior to the enactment of Proposition 64 in November 2004, the UCL “did not predicate standing ‘on a showing of injury or damage’” and was thus “subject to abuse by attorneys who used it as the basis for legal ‘“shakedown”’ schemes” and frivolous lawsuits. (Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798, 812 (Buckland); Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 228.) To address this problem, Proposition 64 amended section 17204 to accord standing only to certain specified public officials and to any person who “‘“has suffered injury in fact and has lost money or property as a result of such unfair competition.”’” (Buckland, at p. 812; § 17204.) Thus, in the aftermath of Proposition 64, only plaintiffs who have suffered actual damage may pursue a private UCL action. A private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition. (§ 17204; Buckland, at p. 817.)
Plaintiff contends she asserted sufficient facts to meet both requirements for standing under section 17204. The first requirement — “‘injury in fact’” — is defined in Buckland as a “‘“distinct and palpable injury”’” suffered “‘as a result of the defendant’s actions.’” Alternatively, Buckland articulates another definition of “‘injury in fact’” as “‘an invasion of a legally protected interest which is (a) concrete and particularized, [citations]; and (b) “actual or imminent, not ‘conjectural’ or ‘hypothetical,’” [citations].’” (Buckland, supra, 155 Cal.App.4th at p. 814.) Plaintiff asserts she met both definitions, having suffered distinct and palpable injury and the concrete and actual invasion of a legally protected interest, because she paid the alleged unlawful commission that was illegally retained or received by defendant as a percentage of plaintiff’s insurance payments.
To support her assertion she suffered injury in fact, plaintiff relies on Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796 (Aron), where plaintiff Aron rented a truck from U-Haul. At the time, U-Haul supplied each customer with a partially fueled truck and required the customer (in order to avoid refueling charges) to return the truck with the pre-rental amount of fuel, measured solely by the fuel gauge. (Id. at pp. 800-801.) Aron alleged he returned the truck to U-Haul “with more fuel than he was provided” and “asked for credit or reimbursement for the excess fuel but was refused.” (Id. at p. 801.) He alleged “‘injury in fact’” — an “economic loss” — because, in the absence of a precise gauge, “the only way to avoid the imposition of U-Haul’s charge was to overfill the fuel tank.” (Id. at pp. 802-803.) He further alleged “the use of the fuel gauge as the instrument of measurement” did not comply with California law on weights and measurements. (Id. at p. 803.) The appellate court held Aron had standing to file a UCL complaint because his “allegations set forth a basis for a claim of actual economic injury as a result of an unfair and illegal business practice.” (Ibid.)
Plaintiff contends there “is essentially no difference between Aron being required to pay for excess fuel (standing granted) and [plaintiff] here being required to pay an unlawful commission.” Not so. There is a difference and it is a decisive one. Aron suffered “actual economic injury”: Due to U-Haul’s imprecise measuring system, he paid more to refuel the truck than required under the rental agreement. (Aron, supra, 143 Cal.App.4th at p. 803.) In other words, Aron could have paid less to rent the truck had U-Haul employed an accurate measuring system. In contrast, plaintiff here does not allege she paid more for the insurance due to defendant’s collecting a commission. She does not allege she could have bought the same insurance for a lower price either directly from the insurer or from a licensed agent. Absent such an allegation, plaintiff has not shown she suffered actual economic injury. Rather, she received the benefit of the bargain, having obtained the bargained for insurance at the bargained for price. (Medina v. Safe-Guard Products, Internat., Inc. (June 19, 2008, G038816) __ Cal.App.4th __ [2008 WL 2448020] [insurance policy sold by unlicensed insurer is nevertheless enforceable by the insured].)
Instructive here is Hall v. Time Inc. (2008) 158 Cal.App.4th 847 (Hall), where the plaintiff Hall based his UCL claim on allegations a book seller deceptively sent buyers invoices to pay for a book during a free trial period. (Id. at p. 850.) Hall received the book, kept it, and did not make payment until after the free trial period expired. (Id. at pp. 850-851.) A different panel of this court held Hall lacked standing to pursue his UCL claim. (Id. at p. 849.) Hall “did not allege he did not want the book, the book was unsatisfactory, or the book was worth less than what he paid for it.” (Id. at p. 855.) So too, in the instant case, plaintiff does not allege she was dissatisfied with the insurance or was uninformed of its price. Indeed, in her fraud claim in the first amended complaint, plaintiff acknowledged defendant disclosed to her “the price and extent of the storage insurance coverage.”
Because plaintiff failed to allege facts showing injury in fact, we need not address her assertion she met the second requirement for standing — i.e., she lost money as a result of the alleged unfair competition — except to briefly discuss the meaning of the phrase “lost money” in section 17204. In plaintiff’s view, a person has lost money when the money is “no longer in [his or] her possession.” But this proposed definition encompasses every purchase or transaction where a person pays with money. In Hall, we defined a loss, for purposes of section 17204, as “‘[a]n undesirable outcome of a risk; the disappearance or diminution of value, usu. in an unexpected or relatively unpredictable way.’” (Hall, supra, 158 Cal.App.4th at p. 853.) Thus, in Hall, the plaintiff “expended money by paying [the seller] $29.51 — but he received a book in exchange”; therefore he did not lose money or suffer injury in fact. (Id. at p. 855.)
Alternatively, plaintiff argues that, even if she lacks the standing prescribed in section 17204, she may bring a UCL action because “a violation of the . . . Insurance Code creates a cause of action for unfair business practices.” For this proposition she relies on Wayne v. Staples, Inc. (2006) 135 Cal.App.4th 466 (Wayne) and Stevens v. Superior Court (1999) 75 Cal.App.4th 594 (Stevens). We note that the existence of a cause of action does not answer the question of who has standing to bring the claim. And in any case, both Stevens and Wayne are inapposite. Stevens was filed prior to the 2004 adoption of Proposition 64. Wayne did not address the issue of the plaintiff’s standing to bring a UCL claim. Rather, Wayne considered whether the defendant was exempt from the Insurance Code’s licensing requirements under a statutory exception. (Wayne, at pp. 477-478.) In Wayne, the defendant charged the plaintiff an insurance premium that was twice as high as the amount the defendant paid the shipper (who contracted with the insurer). (Id. at p. 472, fn. 1.) The issue in Wayne was whether that “100 percent markup” constituted a commission within the meaning of Insurance Code section 1635 (which allows certain persons to sell insurance without a license so long as no commission is paid). (Wayne, at p. 478.) Thus, neither Stevens nor Wayne supports plaintiff’s implied assertion that section 17204 does not apply to UCL claims predicated on Insurance Code violations.
The Court Properly Sustained Defendant’s Demurrer to Plaintiff’s Unjust Enrichment Claim
Plaintiff contends she “properly pled facts to support her cause of action for quasi-contract-unjust enrichment” in her second amended complaint, relying on the following pleadings: (1) plaintiff “conferred a benefit upon” defendant; (2) defendant “knowingly accepted and retained the benefits”; (3) defendant “has been unjustly enriched by the benefit conferred by” plaintiff; and (4) “it would [be] unjust and unconscionable to permit [defendant] to be enriched at [plaintiff’s] expense.”
The elements of an unjust enrichment claim are the “receipt of a benefit and [the] unjust retention of the benefit at the expense of another.” (Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.) Here, plaintiff received the benefit of the bargain. “[T]he ‘mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefor.’” (Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 134.) “There is no equitable reason for invoking restitution when the plaintiff gets the exchange which he expected.” (Comet Theatre Enterprises, Inc. v. Cartwright (9th Cir. 1952) 195 F.2d 80, 83.)
Plaintiff contends the insurance policy “was actually worth less than what she paid for [it]” because defendant “extracted a percentage of [her] payment.” As discussed above, absent an allegation by plaintiff that she could have bought the same policy elsewhere for a lower price, she suffered no actual injury. Moreover, an insurance policy is enforceable by the insured despite the unlicensed status of the insurer. (Medina v. Safe-Guard Products, Internat., Inc., supra, ___ Cal.App.4th ___ [2008 WL 2448020].)
But plaintiff asserts she need not allege any actual damage to state an unjust enrichment claim. For this proposition she relies on the recent case of County of San Bernardino v. Walsh (2007) 158 Cal.App.4th 533 (San Bernardino). San Bernardino involved “a political corruption scandal” where certain San Bernardino County officials accepted bribes from contractors (and their consultants) who then obtained profitable, often no-bid, contracts with the county. (Id. at pp. 537-539.) “[I]n an effort to recover damages suffered as a result of the bribery,” the county sued various defendants, including consultants who received lucrative fees from contractors. (Id. at p. 537.)
On appeal the defendants challenged an unjust enrichment award against them, arguing the county “did not incur any damage from the bribery scheme because the county’s money was not used to pay the bribes.” (San Bernardino, supra, 158 Cal.App.4th at p. 541.) In affirming the award, the appellate court stated in dicta the passage upon which plaintiffs here rely: “‘[T]he public policy of this state does not permit one to “take advantage of his own wrong”’ regardless of whether the other party suffers actual damage. [Citation.] Where ‘a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss or, in some cases, any loss, but nevertheless the enrichment of the defendant would be unjust . . . [t]he defendant may be under a duty to give to the plaintiff the amount by which [the defendant] has been enriched.’” “The emphasis is on the wrongdoer’s enrichment, not the victim’s loss. In particular, a person acting in conscious disregard of the rights of another should be required to disgorge all profit because disgorgement both benefits the injured parties and deters the perpetrator from committing the same unlawful actions again.” (Id. at p. 542.)
But despite the court’s dictum statements that an unjust enrichment victim need not suffer any loss, the evidence in San Bernardino, supra, 158 Cal.App.4th 533,showed “the County suffered a monetary loss” of “millions of dollars” (id. at p. 541), and the money “awarded to the County . . . was rightfully the County’s.” (Id. at p 543.) For, although the county did not directly pay the consultants, the county was the ultimate “source of the money” and “it [could] fairly be said that the entire bribery scheme was ‘at the expense’ of the County and its residents.” (Id. at p. 544.)
In another distinguishing point, San Bernardino clarified that “[d]isgorgement of profits is particularly applicable in cases dealing with breach of a fiduciary duty, and is a logical extension of the principle that public officials and other fiduciaries cannot profit by a breach of their duty.” (San Bernardino, supra, 158 Cal.App.4th at p. 543.) In sum, San Bernardino’s holding does not support plaintiff’s assertion she need not allege any actual injury to bring an unjust enrichment claim.
Moreover, San Bernardino recognized the maxim that restitution should be required only when it “‘involves no violation or frustration of law or opposition to public policy, either directly or indirectly.’” (San Bernardino, supra, 158 Cal.App.4th at p. 542.) To permit plaintiff to pursue her claim under the label “unjust enrichment” would allow her to circumvent the law and public policy reflected in (1) section 17204’s mandate that only an injured plaintiff may assert a private action under the UCL, and (2) the Legislature’s decision not to create a private right of action for violations of the Insurance Code sections relevant to this case. As to this second point, plaintiff does not contend that a private right of action exists for pertinent Insurance Code violations, nor can she. Insurance Code section 1758.74 grants the Commissioner the power to enforce the relevant sections of the Insurance Code. A “statute creates a private right of action only if the statutory language or legislative history affirmatively indicates such an intent.” (Farmers Ins. Exchange v. Superior Court (2006) 137 Cal.App.4th 842, 850, 853 [Ins. Code, § 1861.10 creates no private right of action].) “Particularly when regulatory statutes provide a comprehensive scheme for enforcement by an administrative agency, the courts ordinarily conclude that the Legislature intended the administrative remedy to be exclusive unless the statutory language or legislative history clearly indicates an intent to create a private right of action.” (Id. at p. 850.)
But plaintiff argues her unjust enrichment claim is not based solely on “breach” of the Insurance Code. In examining this contention, we look beyond the claim’s label, which is not dispositive when reviewing a trial court’s sustaining of a general demurrer. (McBride v. Boughton (2004) 123 Cal.App.4th 379, 387.) Instead we focus on the complaint’s “actual gravamen” (ibid.), on its “facts alleged.” (Ananda Church of Self-Realization v. Massachusetts Bay Ins. Co. (2002) 95 Cal.App.4th 1273, 1281, italics in original.) The gravamen of plaintiff’s unjust enrichment claim in her second amended complaint is that defendant was “unjustly enriched by the payment of the fees” because defendant (1) was not properly licensed or “authorized” to offer or sell insurance, (2) failed to properly train and list its employees authorized to offer insurance, and (3) “unlawfully retained . . . the money paid by plaintiff . . . .” These allegations — that defendant acted improperly, unlawfully, and without authority — can only be predicated on plaintiff’s implied assertion defendant failed to comply with the Insurance Code. Plaintiff points us to no other basis for her allegation defendant acted wrongfully, and indeed, her allegations track requirements imposed by Insurance Code sections 1758.7 and 1758.72. Although plaintiff excised from her second amended complaint most express references to the Insurance Code, she retained the explicit allegations that (1) “defendant is a self-service storage facility as defined in . . . Insurance Code section 1758.791” and (2) “Insurance Code section 1758.7(a)” prohibits a self-service storage facility from offering or selling insurance unless the vendor is licensed. In sum, the facts alleged in the second amended complaint reveal plaintiff’s cause of action is founded on sections of the Insurance Code for which no private right of action exists.
Plaintiff contends “several of [her] factual allegations have no bearing whatsoever on whether the . . . Insurance Code was violated,” pointing to her allegation defendant failed “to expend [any] financial resources to properly train [its] employees” authorized to offer insurance on its behalf. In fact, Insurance Code section 1758.72 requires a vendor to “provide” such training, a mandate which entails sufficient funding. This exemplifies the weakness of plaintiff’s attempts to distance her allegations from the Insurance Code.
Plaintiff contends San Bernardino, supra, 158 Cal.App.4th 533 “found proper an award of damages, on the basis of unjust enrichment, for violation of . . . Government Code section 1090, which does not contain a private right of action.” In fact, San Bernardino involved two appeals. (Id. at pp. 537-538.) The first appeal dealt with an unjust enrichment claim. (Id. at p. 541.) The other appeal included a Government Code section 1090 claim where the defendants did not challenge the trial court’s finding they violated the statute or the county’s standing to bring the claim. (Id. at pp. 547, 549.)
Plaintiff provides no authority for her assertion a private right of action does not exist for violation of Government Code section 1090.
Finally, plaintiff asserts Hirsch v. Bank of America (2003) 107 Cal.App.4th 708 (Hirsch) is similar to this case, but in fact it is not. Hirsch held, inter alia, the plaintiffs there “stated a valid cause of action for unjust enrichment based on [the defendant’s] unjustified charging and retention of excessive fees” which were passed on to the plaintiffs. (Id. at p. 722.) Thus, Hirsch involved plaintiffs who alleged they paid “overcharges” in the form of excessive fees that were unjustly retained by the defendants at the plaintiffs’ expense. (Ibid.) This point, Hirsch’s only pertinence to the case before us, is a conclusively distinguishing one.
Plaintiff lacks standing to bring an action under the UCL or under the Insurance Code, and she cannot do so under the guise of unjust enrichment. Moreover, she is not entitled to restitution because she received the benefit of the bargain. The court properly sustained, without leave to amend, defendant’s demurrer to plaintiff’s second amended complaint.
DISPOSITION
The judgment is affirmed. Defendant shall recover its costs on appeal.
WE CONCUR: SILLS, P. J., ARONSON, J.