TROYK v. FARMERS GROUP, INC











Filed 3/10/09; on rehearing






CERTIFIED FOR PARTIAL PUBLICATION^*

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

THOMAS E. TROYK, Plaintiff and Respondent, v. FARMERS GROUP, INC. et al., Defendants and Appellants.	D049983 (Super. Ct. No. GIC836844)
PREMATIC SERVICE CORPORATION (CALIFORNIA) et al., Movants.

STORY CONTINUE FROM PART II….

Farmers also argue the trial court abused its discretion in awarding the class members restitution of the service charges they paid to Prematic during the class period. Farmers argue restitution cannot be awarded against them because the service charges were paid directly to Prematic and not to either of FGI or FIE. In support of their argument, they selectively cite language from Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th 1134: "Any award that plaintiff would recover from defendants would not be restitutionary as it would not replace any money or property that defendant took directly from plaintiff." (Id. at p. 1149.) However, that language was parsed from the facts and analysis in that case, which involved money in which the plaintiff never had a vested interest and for which the plaintiff, in effect, sought disgorgement, rather than restitution, from the defendant. (Id. at pp. 1148-1150.) Therefore, we conclude Korea Supply is inapposite to our case and does not hold that a plaintiff who paid a third party money (i.e., money in which the plaintiff had a vested interest) may not seek UCL restitution from a defendant whose unlawful business practice caused the plaintiff to pay that money. As Shersher v. Superior Court (2007) 154 Cal.App.4th 1491 stated: "The message of Korea Supply is that 'in the UCL context . . . restitution means the return of money to those persons from whom it was taken or who had an ownership interest in it.' [Citation.]" (Shersher, at p. 1497, quoting Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 455.)
Business and Professions Code section 17203 provides for restitution under the UCL:
"Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of [Business and Professions Code] Section 17204 . . . ."^[1] (Italics added.)

As noted above, since the passage of Proposition 64 in 2004, a private individual has standing to bring a UCL action only if he or she "has suffered injury in fact and has lost money or property as a result of the unfair competition."^[2] (Bus. & Prof. Code, § 17204.) "Through the UCL a plaintiff may obtain restitution and/or injunctive relief against unfair or unlawful practices in order to protect the public and restore to the parties in interest money or property taken by means of unfair competition." (Kraus v. Trinity Management Services, Inc. (2000) 23 Cal.4th 116, 126.) "A UCL action is an equitable action by means of which a plaintiff may recover money or property obtained from the plaintiff or persons represented by the plaintiff through unfair or unlawful business practices." (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) "[A] court of equity may exercise the full range of its inherent powers in order to accomplish complete justice between the parties, restoring if necessary the status quo ante as nearly as may be achieved." (People v. Superior Court (1973) 9 Cal.3d 283, 286.)
County of Solano v. Vallejo Redevelopment Agency (1999) 75 Cal.App.4th 1262 discussed the remedy of restitution:
" 'A person who has been unjustly enriched at the expense of another is required to make restitution to the other.' (Rest., Restitution, § 1.) 'A person is enriched if he receives a benefit at another's expense. (Id., com. a, p. 12.) The term "benefit" "denotes any form of advantage." (Id., com. b, p. 12.) Thus, a benefit is conferred not only when one adds to the property of another, but also when one saves the other from expense or loss. Even when a person has received a benefit from another, he is required to make restitution "only if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for him to retain it." (Id., com. c, p. 13.)' (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51 [51 Cal.Rptr.2d 687, 924 P.2d 996] (Ghirardo).) 'For a benefit to be conferred, it is not essential that money be paid directly to the recipient by the party seeking restitution.' (California Federal Bank v. Matreyek (1992) 8 Cal.App.4th 125, 132 [10 Cal.Rptr.2d 58] (Matreyek).)" (County of Solano at p. 1278, italics added.)

In that case, the court concluded that although "Vallejo was not a party to the agreement between the Agency and Solano County, it set in motion the actions of the Agency to contract with Solano County for the redevelopment . . . ." (County of Solano at pp. 1279-1280.) Because Vallejo was enriched because of the Agency's payments to a third party (payments known to Vallejo), the court held Vallejo was unjustly enriched and therefore affirmed the judgment awarding County of Solano restitution against Vallejo. (Id. at p. 1280.)
Accordingly, case law does not support Farmers' argument that they cannot be liable for restitution under the UCL because Prematic, rather than FIE or FGI, was the direct recipient of the service charges. (County of Solano v. Vallejo Redevelopment Agency, supra, 75 Cal.App.4th at pp. 1279-1280; see also Hirsch v. Bank of America (2003) 107 Cal.App.4th 708, 721-722; Shersher v. Superior Court, supra, 154 Cal.App.4th at p. 1500 [UCL restitution does not require money be paid directly to defendant]; Matoff v. Brinker Restaurant Corp. (C.D.Cal. 2006) 439 F.Supp.2d 1035, 1038 ["If Defendant unlawfully misappropriated Plaintiff's tips, Plaintiff may seek [UCL] restitution even if Defendant directed the misappropriated funds to the bartenders."].) The UCL "requires only that the plaintiff must once have had an ownership interest in the money or property acquired by the defendant through unlawful means." (Shersher, supra, at p. 1500.) In Shersher, the court held that the plaintiff therefore could state a UCL cause of action for restitution against a manufacturer even though the plaintiff purchased the product from, and paid money directly to, a retailer. (Id. at pp. 1494, 1500.)
In the circumstances of this case, although the class members did not pay the service charges directly to either FGI or FIE, the trial court could have properly inferred from the undisputed facts that FGI and FIE received a benefit from those service charge payments (which FIE and FGI required) even though they did not directly receive money. As noted above, Prematic was incorporated by, and is a wholly owned subsidiary of, FGI. To the extent Prematic earned profits from those service charge payments, its net worth increased and the value of FGI's stock investment in Prematic likewise increased, thereby benefiting FGI. Furthermore, the record shows Prematic paid FGI for use of FGI's equipment and personnel necessary for the performance of most of Prematic's obligations under the Prematic Agreement. Therefore, FGI received the benefit of direct revenue from Prematic for the services FGI provided to Prematic in Prematic's performance of its obligations under the Prematic Agreement. Accordingly, it can be inferred a substantial portion of the service charges paid by the class members to Prematic were indirectly received by FGI through payments made by Prematic to FGI for services rendered. Also, as we discuss below, the trial court properly exercised its equitable discretion in concluding FGI and Prematic acted as a single enterprise. Therefore, the class members' payments to Prematic should be treated as if paid to FGI. Accordingly, the trial court did not abuse its discretion by concluding FGI may be liable to the class members for restitution under the UCL.
Likewise, because Prematic was acting as FIE's agent in billing and collecting premiums and service charges from the class members, the trial court could properly conclude FIE, as the principal, may be liable for UCL restitution for service charges paid by the class members to FIE's agent (Prematic). Contrary to Farmers' argument, the fact the Prematic Agreement ostensibly stated that Prematic was the agent of the class members did not preclude a finding that Prematic was, in fact, the agent of FIE or, at least, a dual agent of both the class members and FIE.^[3] FIE required insureds who elected a one-month term policy to enter into the Prematic Agreement. Prematic is a wholly owned subsidiary of FGI, FIE's attorney-in-fact, which manages and administers FIE's insurance business. Prematic's primary, if not sole, business is to perform monthly billing and collection services for those insureds who select one-month term policies. Prematic bills those insureds for the stated premium plus a service charge and forwards the insureds' payments to FIE (less the service charge). Because in performing those services Prematic was acting as FIE's agent, the trial court did not abuse its discretion by concluding FIE, as Prematic's principal, may be liable to the class members for restitution under the UCL.
To the extent Farmers challenge the trial court's finding that FIE, FGI, and Prematic were acting as a single enterprise and therefore FIE and FGI may be liable to the class members for UCL restitution, we conclude the trial court did not abuse its discretion in so finding. The "single enterprise," or alter ego doctrine, is an equitable doctrine:
"A corporate identity may be disregarded--the 'corporate veil' pierced--where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation. [Citation.] Under the alter ego doctrine, then, when the corporate form is used to perpetuate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation's acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. [Citations.] The alter ego doctrine prevents individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds. [Citation.]" (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.)

"In California, two conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone. [Citations.]" (Id. at p. 538.) Alter ego liability is not limited to the parent-subsidiary corporate relationship; rather, "under the single enterprise rule, liability can [also] be found between sister [or affiliated] companies." (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1249.) Factors for the trial court to consider include the commingling of funds and assets of the two entities, identical equitable ownership in the two entities, use of the same offices and employees, disregard of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other. (Sonora Diamond, at pp. 538-539.) "No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied. [Citation.]" (Id. at p. 539.)
Based on our review of the undisputed facts, we conclude there is substantial evidence to support the trial court's finding that FGI, FIE, and Prematic acted as a single enterprise and therefore FGI and FIE may be liable for UCL restitution. Prematic is a wholly owned subsidiary of FGI and all of its directors are officers or employees of FGI. Prematic performs most of its billing and forwarding activities by using FGI's equipment and personnel and pays FGI for such use. More importantly, FGI, as FIE's managerial agent and attorney-in-fact, presumably designed and effected the scheme whereby any FIE insured who elected a one-month term policy would be required by FIE to execute the Prematic Agreement, requiring the insured to pay to Prematic not only the stated premium but also a service charge for paying in full that stated premium. Not only did FGI's actions, in combination with FIE's actions, result in a violation of section 381, subdivision (f)'s disclosure requirement, but FGI's actions also resulted in FGI effectively receiving (indirectly through Prematic) service charge revenue in addition to its contractual compensation for acting as FIE's attorney-in-fact (i.e., a certain percentage of FIE's premiums). There is substantial evidence that FGI used Prematic as a mere shell or conduit for the performance of the billing and forwarding functions for the class members for which Prematic received service charges that had been omitted from, or not disclosed as part of premium in, their policies.
Likewise, there is substantial evidence to support a finding that Prematic was an alter ego of, or acted as part of a single enterprise with, FIE. Although FIE did not control or own any shares of stock of Prematic, the trial court could reasonably infer that FGI's managerial and administrative control over FIE's activities as FIE's attorney-in-fact allowed FGI to control the activities of both FIE and Prematic, effectively making FIE and Prematic sister, or at least affiliated, entities for the purpose of applying the single enterprise doctrine to FGI's scheme to require the class members to pay service charges that were not disclosed in their policies as section 381, subdivision (f), requires.
As noted above, FIE required the class members to enter into the Prematic Agreement if they elected to obtain one-month term policies. The class members could not obtain a one-month policy without entering into the Prematic Agreement and paying to Prematic the service charge imposed for paying in full the premium stated in the policy (which stated premium did not include the service charge). That scheme presumably was created by FGI and effectively worked to FGI's benefit, resulting in FGI's receipt (through Prematic) of revenue in addition to that received from FIE for serving as FIE's attorney-in-fact. Although FIE is legally owned by its subscribers (i.e., its insureds), its business activities are effectively controlled by its managing agent and attorney-in-fact, FGI. By the nature of that relationship, the trial court could reasonably infer that, for the purposes of the instant matter, FGI controlled the actions of FIE and FIE, in turn, controlled Prematic's receipt of the service charges by requiring the class members to enter into the Prematic Agreement. FGI did not need to own FIE for application of the alter ego or single enterprise doctrine.^[4]
Furthermore, the trial court could reasonably conclude that if the acts of FGI, FIE, and Prematic were treated as those of Prematic alone, an inequitable result would follow. (Las Palmas Associates v. Las Palmas Center Associates, supra, 235 Cal.App.3d at p. 1249; (Sonora Diamond Corp. v. Superior Court, supra, 83 Cal.App.4th at p. 538.) Therefore, the trial court properly exercised its equitable discretion in finding FGI, FIE, and Prematic acted as a single enterprise and therefore FGI and FIE may both be liable to the class members for UCL restitution. "The essence of the alter ego doctrine is that justice be done." (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.) The trial court could reasonably conclude that justice would not be done without application of the alter ego or single enterprise doctrine in the circumstances of this case. (Ibid.)
D
Farmers also argue the trial court abused its discretion by awarding the class members full restitution of the service charges they paid during the class period. They argue the class members suffered no harm for which they should receive restitution. They also argue the trial court did not adequately weigh the equities and failed to offset the restitution amount by the value of the services the class members received. Because we reverse the judgment on other grounds as discussed below, we do not address these arguments.
E
After oral argument in this appeal, we requested supplemental briefing by the parties on the issues whether: (1) Troyk had standing under Business and Professions Code section 17204 to bring this action; and (2) the issue of standing was raised in the trial court by Farmers and, if not, has that issue been waived. We have received and considered the parties' supplemental briefs on those issues.
In their supplemental brief, Farmers contend Troyk lacks standing to bring a UCL claim because he cannot show he suffered an injury in fact and lost money as a result of unfair competition within the meaning of Business and Professions Code section 17204. Following Proposition 64's amendments in November 2004, Business and Professions Code section 17204 now provides:
"Actions for any relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the Attorney General or any district attorney or by any county counsel authorized by agreement with the district attorney in actions involving violation of a county ordinance, or any city attorney of a city having a population in excess of 750,000, or by a city attorney in any city and county and, with the consent of the district attorney, by a city prosecutor in any city have a full-time city prosecutor in the name of the people of the State of California upon their own complaint or upon the complaint of any board, officer, person, corporation, or association, or by any person who has suffered injury in fact and has lost money or property as a result of the unfair competition." (Italics added.)

Buckland v. Threshold Enterprises, Ltd. (2007) 155 Cal.App.4th 798 (Buckland) summarized the effect of Proposition 64 on UCL class actions brought by private plaintiffs:
"In November 2004, the voters of California approved Proposition 64, which amended Business and Professions Code section 17204 to provide that a private individual has standing to assert a claim under the UCL only if he or she ' "has suffered injury in fact and has lost money or property as a result of such unfair competition." ' [Citations.] Proposition 64 also amended Business and Professions Code section 17203 to provide that, aside from public officials, a person may pursue ' "representative claims or relief on behalf of others" ' only if the person meets the new standing requirement and otherwise complies with Code of Civil Procedure section 382, which governs class actions. [Citations.] These amendments imposed significant new requirements on claimants under the UCL, which had previously 'authorized any person acting for the general public to sue for relief from unfair competition,' and did not predicate standing 'on a showing of injury or damage.' [Citation.] In approving Proposition 64, the voters found and declared that the amendments were necessary to prevent abusive UCL actions by attorneys whose clients had not been 'injured in fact' or used the defendant's product or service, and to ensure 'that only the California Attorney General and local public officials [are] authorized to file and prosecute actions on behalf of the general public.' (Prop. 64, § 1, subds. (b), (e), (f).)" (Buckland, supra, at pp. 812-813.)

Proposition 64's amended standing provisions apply to all UCL cases pending when Proposition 64 took effect (i.e., as of November 3, 2004). (Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 227 (Mervyn's).) Therefore, because the instant action was filed in October 2004 and was pending as of November 3, 2004, Troyk must satisfy Proposition 64's amended standing provisions to prosecute the UCL cause of action on behalf of the class members in this case. (Ibid.; Buckland, supra, at p. 812.)
"A litigant's standing to sue is a threshold issue to be resolved before the matter can be reached on the merits. [Citation.]" (Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993, 1000.) Because elements for standing "are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation. [Citations.]" (Lujan v. Defenders of Wildlife (1992) 504 U.S. 555, 561 (Lujan) [in the context of standing to invoke federal court jurisdiction].) Furthermore, "[f]or a [UCL] lawsuit to be allowed to continue, standing must exist at all times until judgment is entered and not just on the date the complaint is filed." (Mervyn's, supra, 39 Cal.4th at pp. 232-233.)
"Because standing goes to the existence of a cause of action, lack of standing may be raised by demurrer or at any time in the proceeding, including at trial or in an appeal. [Citations.]" (Buckland, supra, 155 Cal.App.4th at p. 813.) " '[C]ontentions based on a lack of standing involve jurisdictional challenges and may be raised at any time in the proceeding.' [Citations.]" (Mervyn's, supra, 39 Cal.4th at p. 233.) Accordingly, we conclude Farmers has not waived or forfeited the contention that Troyk does not have standing to prosecute the UCL cause of action and can now raise it on appeal. (Ibid.; Buckland, supra, at p. 813.)
Troyk's first amended complaint alleges he has standing to prosecute the UCL claim, specifically alleging he "has suffered an injury in fact and has lost money as a result of the conduct alleged." Farmers argue Troyk does not have standing to prosecute the instant UCL claim because he has not shown he suffered an "injury in fact" or that he has "lost money as a result of" the alleged UCL violation. Although Business and Professions Code section 17204 does not expressly define "injury in fact" for purposes of standing, Proposition 64 states: "The people of the State of California find and declare that: [¶] . . . (e) It is the intent of the California voters in enacting this act to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution." (Buckland v. Threshold Enterprises, Ltd., supra, 155 Cal.App.4th at p. 813, fn. 6, italics added.) In so doing, the voters presumably intended to incorporate into Business and Professions Code section 17204 the definition of "injury in fact" as required for standing to bring actions in federal courts under article III of the United States Constitution. (Buckland, at pp. 814-815.) Federal standing requires three elements: (1) an injury in fact; (2) causation; and (3) likelihood that the injury will be redressed by a favorable decision.^[5] (Lujan, supra, 504 U.S. at pp. 560-561.) However, Proposition 64 expressly incorporates into Business and Professions Code section 17204 only the first element (i.e., an "injury in fact") for federal court standing. The United States Supreme Court has described an "injury in fact" for federal court standing purposes as "an invasion of a legally protected interest which is (a) concrete and particularized . . . and (b) 'actual or imminent, not "conjectural" or "hypothetical" ' [citations]." (Lujan, at p. 560.) Lujan elaborated: "By particularized, we mean that the injury must affect the plaintiff in a personal and individual way." (Id. at p. 560, fn. 1.) Alternatively stated, " 'the "injury in fact" test requires more than an injury to a cognizable interest. It requires that the party seeking review be himself among the injured.' [Citation.]" (Id. at p. 563.) Therefore, for Troyk to have standing to prosecute the UCL claim in this case, he must have personally suffered an invasion or injury to a legally protected interest.
An injury to a tangible property interest, such as money, generally satisfies the "injury in fact" element for standing. In Danvers Motor Co., Inc. v. Ford Motor Co. (3d Cir. 2005) 432 F.3d 286 (authored by then Circuit Judge Samuel A. Alito, Jr., currently a Justice of the United States Supreme Court), the court stated:
"A 'legally and judicially cognizable' injury-in-fact must be 'distinct and palpable,' not 'abstract or conjectural or hypothetical.' [Citations.] While it is difficult to reduce injury-in-fact to a simple formula, economic injury is one of its paradigmatic forms." (Danvers Motor Co., Inc., supra, at p. 291, italics added.)

Danvers concluded a plaintiff's out-of-pocket expenses or money spent was a financial harm that constituted "injury in fact" for federal court standing purposes. (Id. at p. 292.) "Monetary harm is a classic form of injury-in-fact. [Citation.]" (Id. at p. 293, italics added.) Judge Alito noted in conclusion: "Injury-in-fact is not Mount Everest. [Citation.] ('The contours of the injury-in-fact requirement, while not precisely defined, are very generous,' requiring only that claimant 'allege[] some specific, "identifiable trifle" of injury')." (Id. at p. 294, quoting Bowman v. Wilson (1982) 672 F.2d 1145, 1151.)
Applying that standard for "injury in fact" to the circumstances in this case, we conclude Troyk has alleged an "injury in fact" for purposes of Business and Professions Code section 17204. The complaint alleges he and the other class members paid monthly service charges that were not disclosed as premium in violation of section 381, subdivision (f), and that Farmers wrongfully required them to pay.^[6] That actual payment of money (i.e., monthly service charges) by Troyk, as wrongfully required by Farmers, constituted an "injury in fact" for purposes of Business and Professions Code section 17204. (Lujan, supra, 504 U.S. at p. 560; Danvers Motor Co., Inc. v. Ford Motor Co., supra, 432 F.3d at pp. 291-293.) Troyk's payment of those service charges was an invasion of a legally protected interest that was concrete, particularized, and actual. (Lujan, supra, at p. 560.) This case is not inapposite to Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796, in which the court concluded the plaintiff sufficiently alleged an "injury in fact" under the UCL because he suffered economic loss by being required by purchase excess fuel on return of a rental truck. (Id. at pp. 802-803.) Rather, the cases cited as support by Farmers are factually inapposite to this case. (See, e.g., Hall v. Time Inc. (2008) 158 Cal.App.4th 847; Medina v. Safe-Guard Products, Internat., Inc. (2008) 164 Cal.App.4th 105; Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583.) None of those cases involved the payment of money in addition to the premium stated in an insurance policy.^[7] In moving for summary judgment, Troyk's separate statement of undisputed material facts asserted he was required to pay service charges in addition to the premium stated in his policy. Farmers' opposition did not dispute that asserted fact. Accordingly, we conclude Troyk has sufficiently alleged, and shown for purposes of summary judgment, an "injury in fact" under Business and Professions Code section 17204.
The second element for UCL standing is whether Troyk "lost money or property." (Bus. & Prof. Code, § 17204.) In the circumstances of this case, Troyk's alleged payment of money in addition to the premium stated in his insurance policy sufficiently alleges lost money.^[8] In this case, Troyk's alleged "injury in fact" and "lost money" are one and the same. In moving for summary judgment, Troyk's separate statement of undisputed material facts asserted he was required to pay service charges in addition to the premium stated in his policy. Farmers' opposition did not dispute that asserted fact. Accordingly, we conclude Troyk has sufficiently alleged, and shown for purposes of summary judgment, "lost money" under Business and Professions Code section 17204.
The third element for UCL standing is whether Troyk has alleged, and shown for purposes of summary judgment, that he has lost money "as a result of" Farmers' unfair competition under the UCL. (Bus. & Prof. Code, § 17204.) Because neither Proposition 64 nor Business and Professions Code section 17204 defines the phrase "as a result of," we interpret it according to its common usage. As Farmers argue, the phrase "as a result of" connotes an element of causation (i.e., Troyk lost money because of Farmers' unfair competition). Therefore, we must determine whether Troyk alleged causation and showed there was no triable issue of fact on the element of causation that would preclude summary judgment in his favor. In a post-Proposition 64 case, one court discussed causation for UCL standing purposes: "[T]here must be a causal connection between the harm suffered and the unlawful business activity. That causal connection is broken when a complaining party would suffer the same harm whether or not a defendant complied with the law." (Daro v. Superior Court (2007) 151 Cal.App.4th 1079, 1099.)^[9] For purposes of this appeal, we need not, and do not, decide exactly what standard of causation (e.g., "a substantial factor" causation standard) applies in determining whether a plaintiff has standing to prosecute a UCL cause of action.^[10] Nevertheless, assuming arguendo the "substantial factor" standard for causation applies, Troyk could have adequately alleged causation for UCL standing purposes by alleging in his complaint that he would not have paid, or not agreed to pay, the monthly service charges even had those charges been properly disclosed as premium in the insurance policy as required by section 381, subdivision (f). However, as noted above, Troyk's operative complaint simply alleges he "suffered an injury in fact and has lost money as a result of" Farmers' alleged unfair competition under the UCL. Because we dispose of this appeal on another ground below, we assume arguendo that Troyk's summary allegation of causation is sufficient for pleading purposes (although a more specific factual allegation regarding causation would have been preferable).
As noted above, in moving for summary judgment, Troyk had the burden to produce evidence showing there are no triable issues of material fact on his causes of action (i.e., his UCL and breach of contract causes of action) and that he is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subds. (c), (p)(1); Aguilar, supra, 25 Cal.4th at p. 843.) Code of Civil Procedure section 437c, subdivision (p)(1), states: "A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on that cause of action." For purposes of a UCL cause of action, a plaintiff therefore must prove the elements for standing to bring a UCL cause of action, including causation of loss of money or property as a result of unfair competition under the UCL. (Bus. & Prof. Code, § 17204.) "In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers . . . and all inferences reasonably deducible from the evidence, except summary judgment may not be granted by the court based on inferences reasonably deducible from the evidence, if contradicted by other inferences or evidence, which raise a triable issue as to any material fact." (Code Civ. Proc., § 437c, subd. (c).)


TO BE CONTINUED AS PART IV….

Publication courtesy of California pro bono legal advice.
Analysis and review provided by La Mesa Property line Lawyers.
San Diego Case Information provided by www.fearnotlaw.com

---