Safeco Ins. Co. of America v. Superior Court

Opinion

COMPTON, Acting P. J.

A defendant seeks a writ of mandate to compel the trial court to dismiss an action accusing it of engaging in unfair business practices.

While driving his motorcycle, plaintiff collided with an automobile. Plaintiff was injured, and his motorcycle was destroyed. The automobile driver had a liability insurance policy written by petitioner Safeco Insurance Company of America. Safeco agreed to bear the expense of a rental automobile for plaintiff. Plaintiff kept the rented automobile for 32 days.

For an additional daily charge of $5, at plaintiff’s request the automobile rental firm provided plaintiff with a “collision damage waiver” (CDW)—in

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effect, no-deductible collision and comprehensive insurance coverage. Safe-co declined to pay this charge as it was incurred and informed plaintiff it considered the charge not to be its responsibility.

Less than six months after the accident, plaintiff settled his claim against the automobile driver (Safeco’s insured) for the sum of $4,500, which Safeco paid, in full satisfaction of plaintiff’s claim for personal injury, property damage, and damage for temporary loss of use of property. In connection with this settlement plaintiff released the automobile driver.

Eight months after settling his claim, plaintiff sued Safeco for having taken the position, during settlement discussions, that the expense of the collision damage waiver was not an item of damage for which its insured was legally liable. This “conduct,” plaintiff alleged, was actionable on two legal theories. First, it constituted an unfair and deceptive claims settlement practice as defined in Insurance Code section 790.03, subdivision (h), thus entitling him to an award of compensatory and punitive damages. Secondly, it amounted to unfair competition within the meaning of Business and Professions Code section 17200, which defines unfair competition to include “unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising.” Under this second theory, plaintiff claimed entitlement to an injunction, compensatory damages, additional compensation for prosecuting the action, punitive damages, and attorneys’ fees. Later, plaintiff amended his complaint to allege he was suing also on behalf of a class of persons similarly situated, and to pray for an award of compensatory and punitive damages to each class member as well.