Mercury Ins. Co. v. Jones
>NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
>
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
FIVE
MERCURY INSURANCE COMPANY et
al.,
Plaintiffs and Appellants,
v.
DAVE JONES, as Insurance
Commissioner, etc.,
Defendant and Respondent.
B244204
(Los
Angeles County
Super. Ct.
No. BS137151)
APPEAL from
an order of the Superior Court of Los
Angeles County, Ann I. Jones, Judge.
Affirmed.
Barger
& Wolen, Steven H. Weinstein, Spencer Y. Kook and Peter Sindhuphak, for
Plaintiffs and Appellants.
Kamala D.
Harris, Attorney General, Dane R. Gillette, Chief Assistant href="http://www.mcmillanlaw.us/">Attorney General, Paul D. Gifford, Senior
Assistant Attorney General, W. Dean Freeman, Felix E. Leatherwood, Stephen Lew
and Lisa W. Chao, Deputy Attorneys General, for Defendant and Respondent.
I. INTRODUCTION
This is an
appeal from a judgment dismissing a mandate petition by plaintiffs, Mercury
Insurance Company, Mercury Casualty Company and California Automobile Insurance
Company (“Mercuryâ€), against Dave Jones, the Insurance Commissioner of the href="http://www.mcmillanlaw.us/">State of California (“the
commissionerâ€). Mercury’s mandate
petition sought review of the commissioner’s March 30, 2012 order, which rejected an administrative law
judge’s proposed decision. The proposed
decision dismissed a noncompliance proceeding (Ins. Code, § 1858.1)
against Mercury on the ground the California Department of Insurance (“the
departmentâ€) had violated due process principles and the href="http://www.fearnotlaw.com/">Administrative Procedure Act (Gov. Code,
§ 11340 et seq.). Mercury’s appeal
challenges the trial court’s order sustaining without leave to amend the
commissioner’s demurrers to the petition on the grounds of failure to exhaust
administrative remedies and failure to state a cause of action for a writ of
mandate (Code Civ. Proc., href="#_ftn1" name="_ftnref1" title="">[1]
§§ 1085, 1094.5) and declaratory relief (§ 1060). We affirm.
II. BACKGROUND
The
petition alleged the following. On February 2, 2004, the department
initiated a Notice of Noncompliance (Ins. Code, § 1858 et seq.) against
Mercury for alleged violations of Proposition 103. The notice, order to show cause and
accusation alleged that Mercury allowed its agents to charge broker fees to
policyholders and then improperly collected premiums in excess of rates
approved by the commissioner. Mercury
allegedly engaged in unfair, deceptive and fraudulent business practices within
the meaning of Insurance Code section 790.03.
The department sought penalties and suspension of Mercury’s certificate
of authority.
During the
noncompliance proceedings before an administrative law judge, Consumer Watchdog
intervened on behalf of the department.
The proceedings progressed to the point of presenting witnesses and
evidence. A controversy arose over
California Code of Regulations, title 10, former section 2614.13 which
governs “prepared direct testimony†of witnesses. Such testimony of each direct witness
expected to be called to testify by the department or intervener was required
to be submitted 40 business days before the evidentiary hearing. The department and intervener intended to
call “adverse witnesses,†who were either current or former employees of
Mercury and its agents and brokers. The
department and intervener maintained that California Code of Regulations, title
10, former section 2614.13 did not apply to adverse witnesses.
On June 5, 2009, the administrative law
judge resolved the controversy in Mercury’s favor by ordering the department
and intervener to submit prepared direct testimonies of all witnesses including
adverse witnesses expected to be called to testify at the hearing. The intervener subsequently submitted the
testimonies of 22 adverse witnesses in the form of exhibits, prior trial and
deposition transcripts, and declarations from other actions. The administrative law judge subsequently
granted Mercury’s motion to strike the submission on the ground it did not
conform to California Code of Regulations, title 10, former
section 2614.13.
The controversy
concerning the 22 adverse witnesses continued over the course of several
years. In November 2009, the department
and intervener sought certification for the commissioner’s decision the
question of whether California Code of Regulations, title 10, former
section 2614.13 applied to adverse witnesses or, alternatively, approval
of the form and procedure for submission of prepared direct testimony of
adverse witnesses. The administrative
law judge, who refused certification in April 2010, ordered the parties to meet
and confer on a procedure to submit the adverse witness testimony.
On August
13, 2010, the commissioner issued a notice of proposed action to amend
California Code of Regulations, title 10, former section 2614.13 to
clarify that prepared direct testimony is required only for certain types of
witnesses. The proposed amendment would
add the following language to California Code of Regulations, title 10, former
section 2614.13: “Prepared direct testimony is required only for witnesses
who, at the time the testimony is offered, are employees, agents, officers,
directors, or independent contractors of the party offering testimony or
experts retained by the party offering the testimony.â€
The Office
of Administrative Law approved the amended California Code of Regulations,
title 10, section 2614.13 on December
30, 2010. The parties
briefed the issue of whether the amendment applied to the noncompliance
proceeding against Mercury. After a
hearing on the issue, the administrative law judge determined the amended
regulation did not apply. But, the
administrative law judge also ordered the department to disclose any ex parte
communications between the department and the commissioner regarding the
noncompliance proceeding which may have blurred the line between the prosecutor
and decision maker and the regulatory and adjudicatory functions.
In
compliance with the administrative law judge’s order, the department’s General
Counsel, Adam M. Cole, filed a declaration denying that there were ex parte
communications between the department and the commissioner regarding the
prepared direct testimony issue and the amended regulation. According to Mr. Cole, he did not
communicate with Commissioner Dave Jones or former Commissioner John Garamendi
on the issues. Mr. Cole did attend
a meeting on June 2, 2009,
with former Commissioner Steve Poizner, which all the parties attended
regarding settling the noncompliance proceeding. In an April 26, 2011 letter to the
administrative law judge, Mr. Cole stated that he directed the initiation
of the rulemaking to remedy what the department contended was an erroneous
interpretation of the former regulation.
Mr. Cole disclosed that he spoke with former Commissioner Poizner’s
chief of staff and special counsel, who were authorized to approve the
rulemaking to amend the regulation. But,
neither the chief of staff nor the special counsel spoke with former
Commissioner Poizner regarding the rulemaking.
On January 31, 2012, the administrative
law judge issued a proposed decision dismissing the noncompliance
proceeding. The proposed dismissal was
based on the administrative law judge’s conclusions: the department failed to comply with California
Code of Regulations, title 10, section 2614.13; the communications between
the department and the commissioner’s office were ex parte communications,
which violated the Administrative Adjudication Bill of Rights (Gov. Code,
§ 11425.10 et seq.); the department failed to maintain a separation
between its investigative, prosecutorial, rule-maker, and adjudicative
functions; and the failure to comply with the separation of functions standards
violated Mercury’s due process and fair hearing rights.
There is no
dispute that the administrative law judge did not conduct an evidentiary
hearing on the noncompliance issue before issuing the proposed decision. On March
30, 2012, the commissioner issued an order rejecting the
administrative law judge’s proposed decision and referring the matter to the
Office of Administrative Hearings for an evidentiary hearing and decision on
the merits of the noncompliance proceedings.
On April 19, 2012, Mercury filed the
current petition seeking traditional (§ 1085) and administrative mandamus
(§ 1094.5) as well as declaratory relief.
Mercury argued traditional mandamus relief was appropriate because the
commissioner lacked authority to reject the proposed decision. Mercury contended the commissioner’s order
was subject to administrative mandamus under section 1094.5. Mercury also requested a declaration on the
issues of whether the commissioner lacked discretion, jurisdiction or authority
to reject the administrative law judge’s decision in light of the alleged due
process violations.
The
commissioner demurred to the petition on the grounds of failure to exhaust
administrative remedies and insufficiency of facts to constitute causes of
action. The commissioner asserted: Mercury did not exhaust administrative
remedies available under the Insurance Code before seeking judicial review;
traditional mandamus was not available to review quasi-adjudicative decisions
by the commissioner, who had discretion to adopt, amend or reject a proposed
decision; administrative mandamus was not available because there is no final
administrative decision, only an order directing a hearing; and declaratory
relief could not be used to attack an administrative decision or circumvent
section 1094.5’s requirements.
The trial
court sustained the demurrer without leave to amend. In so doing, the trial court concluded: administrative mandamus is the sole remedy
available to challenge a final decision; Mercury did not exhaust administrative
remedies or allege sufficient facts showing futility; traditional mandamus was
not available because the commissioner exercised his discretion by rejecting
the proposed decision; and declaratory relief was not available to circumvent
the requirements of section 1094.5.
Plaintiff filed a notice of appeal on September 25, 2012, before the trial court entered a
judgment dismissing the petition on October
9, 2012.href="#_ftn2"
name="_ftnref2" title="">[2] The premature appeal is deemed timely. (See Cal. Rules of Court, rule 8.104(d); >In re Social Services Payment Cases
(2008) 166 Cal.App.4th 1249, 1262, fn. 4.)
III. DISCUSSION
A. Standard of Review
A reviewing
court’s “‘[O]nly task in reviewing a ruling on a demurrer is to determine
whether the complaint states a cause of action.’†(People
ex rel. Lungren v. Superior
Court (1996) 14 Cal.4th 294, 300; Moore
v. Regents of University of
California (1990) 51 Cal.3d 120, 125.)
The reviewing court assumes the truth of allegations in the complaint
which have been properly pleaded and gives it a reasonable interpretation by
reading it as a whole and with all its parts in their context. (Stop
Youth Addiction, Inc. v. Lucky
Stores, Inc. (1998) 17 Cal.4th 553, 558; People ex rel. Lungren v. Superior Court, supra, 14
Cal.4th at p. 300; Aubry v. >Tri-City Hospital Dist. (1992) 2 Cal.4th
962, 967.) However, the assumption
of truth does not apply to contentions, deductions, or conclusions of law and
fact. (People ex rel. Lungren v. Superior Court, supra, 14
Cal.4th at pp. 300-301; Moore v.
Regents of University of California, >supra, 51 Cal.3d at p. 125.) Furthermore, any allegations that are
contrary to the law or to a fact of which judicial notice may be taken will be
treated as a nullity. (>Interinsurance Exchange v. >Narula (1995) 33 Cal.App.4th 1140, 1143;
Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955.) The Supreme Court has held: “On appeal from a judgment of dismissal
entered after a demurrer has been sustained without leave to amend, unless
failure to grant leave to amend was an abuse of discretion, the appellate court
must affirm the judgment if it is correct on any theory. [Citations.]
If there is a reasonable possibility that the defect in a complaint can
be cured by amendment, it is an abuse of discretion to sustain a demurrer
without leave to amend. [Citation.] The burden is on the plaintiff, however, to
demonstrate the manner in which the complaint might be amended. [Citation.]â€
(Hendy v. Losse (1991) 54
Cal.3d 723, 742; Goodman v. >Kennedy (1976) 18 Cal.3d 335, 349.)
B. Noncompliance Statutes and Regulations
The
commissioner has authority to issue a statement of charges and set a hearing to
determine whether to impose penalties against a party the commissioner believes has engaged in
unfair practices. (Ins. Code,
§ 790.05.) The hearing must be
conducted in accordance with the Administrative Procedure Act. (Ins. Code § 790.05; see Gov. Code,
§ 11517, subd. (a); Cal. Code Regs., tit. 10,
§§ 2614 (h) & (i), 2614.1, 2614.2(b).)
The commissioner can refer the matter to an administrative law judge to
conduct the hearing and make a proposed decision, which will be submitted to the
commissioner. (Gov. Code, § 11517,
subd. (c); Ins. Code, § 1858.2, subd. (f); Cal. Code Regs., tit. 10,
§ 2614.24.) The commissioner may
adopt, modify, remand for further hearing, or reject the proposed decision and
decide the matter himself based on the record.
(Gov. Code, § 11517, subd. (c)(2)(D); Cal. Code Regs., tit. 10, §
2614.24, subd. (b).) Thus, the
commissioner issues the final decision on the matter. (Ins. Code, § 1858.2, subd. (f).)
C. Administrative Procedure Act Principles
“While the state’s administrative
agencies have considerable leeway in how they structure their adjudicatory
functions, they may not disregard certain basic precepts. One fairness principle directs that in
adjudicative matters, one adversary should not be permitted to bend the ear of
the ultimate decision maker or the decision maker’s advisers in private. Another directs that the functions of
prosecution and adjudication be kept separate, carried out by distinct
individuals. California's Administrative Procedure
Act (APA) ( Gov. Code, § 11340 et seq.)â€
(Department of Alcoholic Beverage
Control v. Alcoholic Beverage Control Appeals Bd. (2006) 40 Cal.4th 1, 5
(hereafter Quintanar).)
Among the statutory protections in
the administrative adjudication bill of rights provisions of the Administrative
Procedure Act are: “(1) separation of
adjudicative and prosecutorial functions, and (2) restrictions on ex parte
communications.†(Rondon v. Alcoholic Beverage Control Appeals Board (2007) 151
Cal.App.4th 1274, 1284 (hereafter Rondon),
citing Quintanar, >supra, 40 Cal.4th at pp. 9-10.) Government Code section 11425.10,
subdivision (a)(4) provides: “The
adjudicative function shall be separated from the investigative, prosecutorial,
and advocacy functions within the agency . . . .†Ex parte communications are restricted
by Government Code section 11425.10, subdivision (a)(8). Government Codes section 11430.10,
subdivision (a) restricts communications as follows: “While the proceeding is pending there shall
be no communication, direct or indirect, regarding any issue in the proceeding,
to the presiding officer from an employee or representative of an agency that
is a party or from an interested person outside the agency, without notice and
opportunity for all parties to participate in the communication.â€
D. The Mandamus Claims
Mercury contends the trial court
erred in sustaining demurrers to its claims for traditional (§ 1085) and
administrative mandamus (§ 1094.5).
Before resolving the sufficiency of the purported claims, we must
determine the nature of the petition.
Traditional mandamus is available
pursuant to section 1085 subdivision (a), which provides: “A writ of mandate may
be issued by any court to any inferior tribunal, corporation, board, or person,
to compel the performance of an act which the law specially enjoins, as a duty
resulting from an office, trust, or station, or to compel the admission of a
party to the use and enjoyment of a right or office to which the party is
entitled, and from which the party is unlawfully precluded by such inferior
tribunal, corporation, board, or person.â€
There are two requirements for a
section 1085 writ to issue: (1) a clear, present and usually ministerial
duty upon the part of the respondent; and (2) a clear, present and beneficial
right in the petitioner to the performance of that duty. (City
of King> City> v. Community Bank of >Central California (2005) 131 Cal.App.4th 913,
925; Unnamed Physician v. Board of
Trustees (2001) 93 Cal.App.4th 607, 618.)
Mandamus may not be used to control a body to exercise discretion in a
particular manner. (>Ridgecrest >Charter >School> v. Sierra Sands Unified School Dist. (2005) 130 Cal.App.4th 986,
1002; Morris v. Harper (2001) 94
Cal.App.4th 52, 62.)
A petition for administrative
mandamus is appropriate under section 1094.5, subdivision (a) when a party
seeks review of “the validity of any final administrative order or decision
made as the result of a proceeding in which by law a hearing is required to be
given, evidence is required to be taken, and discretion in the determination of
facts is vested in the inferior tribunal, corporation, board, or
officer . . . .†Our
Supreme Court has held: “A petition for
administrative mandamus is appropriate when the party seeks review of a
‘determination, finding, or decision of a public agency, made as a result of a
proceeding in which by law a hearing is required to be given, evidence is
required to be taken and discretion in the determination of facts is vested in
a public agency, on the grounds of noncompliance with [applicable law],’
generally referred to as an ‘adjudicatory’ or ‘quasi-judicial’ decision. [Citations.]â€
(Western States Petroleum Assn. v. Superior Court (1995) 9
Cal.4th 559, 566-567.)
Here, the petition arose after the
commissioner issued a statement of charges and referred the matter to the
Office of Administrative Hearings to assign an administrative law judge to
conduct the hearing against Mercury. The
petition was in the nature of an administrative mandamus proceeding because a
hearing was required, evidence was required to be taken and discretion in the
determination of facts was vested in the commissioner. As such, Mercury’s exclusive means of review
was by a petition for administrative mandamus.
(See also Ins. Code, §§1858.6; 1861.09; Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 382,
fn. 1.)
1. Mercury is not entitled to judicial review by
administrative mandamus.
The trial court correctly determined
the absence of a final decision precluded judicial review by administrative
mandamus. It is well settled that
judicial review by administrative mandamus is limited to a final determination
by the agency “decision maker.†(>City of >Fillmore> v. State Bd. of Equalization (2011) 194 Cal.App.4th 716, 726; McAllister
v. County> of Monterey (2007) 147 Cal.App.4th 253,
284-285.) Insurance Code
section 1861.09 provides in this regard that “for purposes of judicial
review, a decision to hold a hearing is not a final order or
decision . . . .†Moreover, once the
administrative proceedings are initiated, “a court may neither review nor
enforce the administrative decision until after the administrative review
proceedings are completed.†(>City of Fillmore v. State Bd. of
Equalization, supra, 194 Cal.App.4th
at p. 726, citing Abelleira v. District
Court of Appeal (1941) 17 Cal.2d 280, 291-292.) Thus, before obtaining relief from a court,
the party seeking administrative mandamus must exhaust any administrative
agency remedies. (Campbell v. Regents of University of California (2005) 35 Cal.4th
311, 321; City of Fillmore v. State Bd.
of Equalization, supra, 194 Cal.App.4th at pp. 725-726.) “Exhaustion of administrative remedies is ‘a jurisdictional prerequisite to resort
to the courts.’†(Johnson v. City of Loma Linda (2000) 24 Cal.4th 61,
70.)
There is no final decision on the
merits because the commissioner did not issue a final decision. Instead, the commissioner rejected the
administrative law judge’s proposed decision and ordered an evidentiary hearing
on the merits of the charges. There has
never been a hearing determining the merits of the noncompliance order. Accordingly, Mercury’s failure to exhaust its
administrative remedies precluded judicial review of the commissioner’s order
setting a hearing to determine the noncompliance issues on the merits.
2. Mercury did not establish an exception to
exhaustion.
Mercury claims it was not required
to exhaust administrative remedies because the commissioner lacked authority or
jurisdiction to reject the administrative law judge’s decision. (See >Coachella >Valley> Mosquito and Vector Control Dist. v. >California> Public Employment Relations Bd. (2005) 35 Cal.4th 1072,
1081-1082.) The argument lacks merit
because the commissioner is the final decision maker not the administrative law
judge. (Ins. Code, § 1858.2, subd.
(f).) The commissioner had authority to
adopt, reduce, modify or reject the administrative law judge’s decision
dismissing the noncompliance proceeding.
(Gov. Code, § 11517, subd. (c)(2)(A)-(E); Cal. Code Regs., tit. 10,
§ 2614.24, subd. (b).)
Mercury contends that the
administrative law judge’s findings of due process and Administrative Procedure
Act violations narrowed the commissioner’s ultimate decision making power. According to Mercury, the commissioner was
obligated to approve the proposed decision and dismiss the noncompliance action
as recommended or limit its remand to further findings on the due process
violations. To support its contentions,
Mercury relies on Supreme Court authority (Quintanar,
supra, 40 Cal.4th 1) and two appellate court decisions (>Chevron Stations, Inc. v. Alcoholic Beverage
Control Appeals Board (2007) 149 Cal.App.4th 116 (hereafter >Chevron) and Rondon, supra, 151 Cal.App.4th 1274). But, as shown below Mercury’s reliance on
these cases is misplaced at this juncture of the proceedings.
In Quintanar, the Department of Alcoholic Beverage Control brought
administrative actions against several licensees who had allegedly violated the
terms of their licenses. (>Quintanar, supra, 40 Cal.4th at p. 4.)
Evidentiary hearings were held before an administrative law judge, who
prepared a proposed decision for consideration by the director. (Id.
at pp. 5-6.) At that time, the
Department of Alcoholic Beverage Control’s practice after the close of each
administrative hearing was for the prosecutor to prepare a report of the
hearing and send it to the director’s chief counsel. (Id.
at p. 6.) In Quintanar, the administrative law judge recommended dismissal of the
accusations against each of the licensees, but the director rejected the
proposed decision and instead suspended their licenses. (Ibid.)
Our Supreme Court concluded the
Administrative Procedure Act did not “permit ex parte contacts between an
agency’s prosecutor and its ultimate decision maker or his or her advisers
about the substance of the case, prior to the ultimate decision maker rendering
a final decision[.]†(>Quintanar, supra, 40 Cal.4th at p. 8.)
The submission of ex parte reports and recommendations to the ultimate
decision maker in the case violated the licensees’ right to a fair proceeding,
and constituted a violation of the Administrative Procedure Act. (Id.
at pp. 10-11, 15-16.) The Supreme Court
would “not countenance†a situation in which one party submits a “secret
unrebutted review of the hearing to the ultimate decision
maker . . . .†(>Id. at p. 17.) Accordingly, the appropriate remedy was to
reverse the orders suspending the licenses.
However, the Supreme Court did not bar the use of all prosecutor
decision maker reports in the future, only ex parte contacts between advocates
and decision makers. (>Ibid.)
The report could be used so long as it was submitted to both sides and
the licensee was given an opportunity to respond. (Ibid.)
Rondon
considered the same Department of Alcoholic Beverage Control ex parte reporting
practice which had been challenged in Quintanar. (Rondon,
supra, 151 Cal.App.4th at
pp. 1287-1288.) >Rondon reversed a decision by the
Alcoholic Beverage Control Appeals Board to affirm a Department of Alcoholic
Beverage Control’s decision to revoke a liquor license. (Id.
at pp. 1279, 1289-1290.) >Rondon concluded the Department of
Alcoholic Beverage Control violated the Administrative Procedure Act’s
prohibition of ex parte communication. (>Ibid.)
Rondon further concluded that
no showing of prejudice was required to warrant reversal of the decision to
revoke the liquor license because of the Department of Alcoholic Beverage
Control’s ex parte communication and use of extra-record information to make
the ultimate decision. (>Id. at p. 1290.)
Similarly, in Chevron Stations, Inc.,
reversal of an order suspending a license was the required remedy when the
Department of Alcoholic Beverage Control decision maker was given a report of
the hearing by the prosecutor before a decision was made. (Chevron
Stations, Inc., supra, 149 Cal.App.4th at pp. 120-121.)
All of the aforementioned cases were
based on ex parte communications concerning the merits of a final decision by an administrative agency to revoke a
license. These cases addressed the
appropriate remedy for a final decision in which ex parte communications were
made about the merits to the decision
maker following full blown hearings.
This case, however, raises two different issues: (1) an ex parte communication in the
rule making process concerning presentation of evidence; and (2) an
exhaustion of administrative remedies for failure to obtain a final decision. None of the cases cited by Mercury involved
an exhaustion of administrative remedies claim.
The cited cases did not hold an ex parte communication in the rule
making process concerning the use of evidence excuses a party from exhausting
available administrative remedies. The
cited cases also did not purport to hold that, once an administrative law judge
makes due process and Administrative Procedure Act findings, the decision maker
is bound by them.
In addition, Mercury failed to
establish it was futile to exhaust available administrative remedies. Futility is a narrow exception to the
exhaustion doctrine which will excuse a plaintiff that can positively state
what the administrative decision would have been in the particular case. (>Coachella >Valley> Mosquito & Vector Control Dist. v. >Cal. Pub. Emp.
Rel. Bd., supra, 35 Cal.4th at p. 1081; Ogo
Associates v. City of Torrance (1974) 37 Cal.App.3d 830, 834.) There is no way to predict whether the
evidentiary dispute over presentation of direct testimony will ultimately
affect the outcome of the noncompliance proceeding. Should Mercury prevail on the merits in the
noncompliance proceedings, the ex parte communications issue is moot.
Even if Mercury does not prevail on
the merits, its claims of due process and statutory violations may be more
fully developed for consideration on remand.
For that reason, we disagree with Mercury’s assertion that completing
the hearing process is a wholly inadequate remedy because its due process
rights to a fair hearing have already been violated by the hearing process. (See Brown
v. City of Los Angeles (2002) 102 Cal.App.4th 155,
168.) Mercury claims it is harmed by
having to continue to defend against the noncompliance proceedings. Mercury’s concerns about the fairness of the
administrative proceeding may be addressed if and when there is a final
decision on the merits. And, rather than
being inadequate, the hearing will provide an opportunity for the parties to
address the issues.
Under the circumstances, Mercury did
not establish any basis for failing to exhaust its administrative
remedies.
3. Mercury did not establish a traditional
mandamus claim.
The trial court also correctly
sustained the demurrer to the traditional mandamus claim. As we have discussed above, the exclusive
remedy for review in this matter is by administrative mandamus after a final
decision.
Furthermore, Mercury did not allege
facts showing a ministerial duty on the commissioner’s part to adopt a proposed
decision of an administrative law judge.
(City of King City v. Community Bank
of Central California, supra, 131 Cal.App.4th at p. 925; >Unnamed Physician v. Board of Trustees,
supra, 93 Cal.App.4th at p. 618.)
The contrary is true; Government Code section 11517,
subdivision (c)(2)(A)-(E) grants the commissioner discretion to adopt,
reduce, modify, or reject a proposed decision.
In any event, Mercury’s failure to
exhaust administrative remedies would also preclude review of a traditional
mandamus claim. (Eight Unnamed Physicians v. Medical Executive Com. (2007) 150
Cal.App.4th 503, 511-512; Unnamed
Physician v. Board of Trustees, supra, 93 Cal.App.4th at pp. 619-620.)
E. The Declaratory Relief Request
The petition also sought a
declaration regarding the commissioner’s jurisdiction or authority or to
exercise his discretion in rejecting the proposed decision. But, these are the same issues which are
raised by the traditional and administrative mandamus claims. We have concluded the appropriate means of
judicial review in this case for Mercury’s claims is by administrative mandamus
after a final decision.
Declaratory relief is appropriate to
establish rights between parties “in cases of actual controversy†(Code Civ.
Proc., § 1060); however, it is not an appropriate means to obtain judicial
review of an administrative decision. (>State v. Superior Court (1974) 12 Cal.3d
237, 247; Hill v. Manhattan Beach
(1971) 6 Cal.3d 279, 287.) Our Supreme
Court has explained that “actual controversy†means: “one which admits of
definitive and conclusive relief by judgment within the field of judicial
administration, as distinguished from an advisory opinion upon a particular or
hypothetical state of facts.†(>Selby Realty Co. v. City of San Buenaventura
(1973) 10 Cal.3d 110, 117.) At this
stage of the action, there is no concrete dispute upon which definitive and
conclusive judicial relief can be given because the only action against Mercury
is a pending noncompliance proceeding.
(See Selby Realty Co. v. City of
San Buenaventura, supra, 10
Cal.3d at pp. 117, 126-127.)
IV. DISPOSITION
The judgment dismissing the petition
is affirmed. Dave Jones, in his official
capacity as the Insurance Commissioner of the State of California, is awarded his costs on
appeal from plaintiffs, Mercury Insurance Company, Mercury Casualty
Company and California Automobile Insurance Company.
NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS
O’NEILLhref="#_ftn3" name="_ftnref3" title="">*
We
concur:
TURNER, P.J.
MOSK, J.
id=ftn1>
href="#_ftnref1" name="_ftn1" title="">[1] All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
id=ftn2>
href="#_ftnref2" name="_ftn2" title="">[2] On January 14,
2013, we denied Mercury’s petition for stay or writ of supersedeas
filed on January 3, 2013.