In Medina v. Safe-Guard Products, Int’l, Inc., ___ Cal.App.4th ___ (Jun. 19, 2008) (Fourth Appellate District, Division Three), the Court of Appeal held that an insurance contract issued by an unlicensed insurer is nonetheless enforceable. The Court had some harsh language for the plaintiff, who attempted to pursue a UCL "unlawful" prong claim based on the argument that the defendant's violation of the Insurance Code's licensure requirement rendered the insurance contract entirely void and therefore valueless:
The irony is that Medina’s class action is predicated on the idea that he bought an absolutely void contract and cannot enforce it (hence he is out the money he paid for the contract, having received nothing for it). That raises the problem of just exactly what are the consequences to a consumer who buys an insurance contract from an unlicensed, out of state insurer. Is the consumer really without insurance? We are unaware of any California authority addressing the question, hence we publish our answer to it in this opinion. As readers might readily intuit, California law most certainly does not leave consumers in the lurch when they inadvertently purchase an insurance policy from an unlicensed insurer.
Slip op. at 2 (footnote omitted); see also id. at 7 ("[T]he case is a little more complicated ..., because it is Medina who, in this litigation, actually does not want the contract to be enforceable by him. He'd rather be a class action plaintiff whose case depends on the idea that the insurance contract is not enforceable." (Emphasis in original.)).
The opinion goes on:
[H]olding an insurance contract void because the insurer was not licensed is about the worst possible remedy for the illegality of the insurer’s unlicensed status. To do so would be incredibly harmful to consumers who unknowingly purchased insurance from unlicensed insurers, and who, all of a sudden, would find themselves stuck with a loss which they thought they validly insured against. (See McIntosh v. Mills, supra, 121 Cal.App.4th at p. 347 [noting “the harsh results that might be visited on innocent parties to a contract when their agreement is voided for illegality”].)
Id. at 5. Then, relying entirely on Hall v. Time Inc., 158 Cal.App.4th 847 (2008), the court concluded that the plaintiff had suffered no injury in fact and therefore lacked standing under Proposition 64:
Medina has not alleged that he didn’t want wheel and tire coverage in the first place, or that he was given unsatisfactory service or has had a claim denied, or that he paid more for the coverage than what it was worth because of the unlicensed status of Safe-Guard. He hasn’t suffered any loss because of Safe-Guard’s unlicensed status.
Id. at 9 (emphasis in original). The opinion's final footnote is interesting:
In his supplemental briefing, Medina also suggests that Hall is distinguishable because in that case the plaintiff obviously “intended the entire exercise as the predicate for a UCL lawsuit” while here Medina had no such intent. However, there is no statutory basis, at least in terms of the Proposition 64 amendment, to differentiate UCL actions based on the subjective motivation of the plaintiff; the differentiation is between instances where there is actual loss of property versus no such loss.
Id. at 10 n.10 (emphasis in original). It is certainly true that there is no statutory basis to differentiate UCL cases based on the plaintiff's subjective motivations, but some courts seem to do it nonetheless. The tone of this very opinion suggests, correctly or not, that the court does in fact have a problem with the plaintiff's motivation for bringing the case. Other examples include O'Brien v. Camisasca Automotive Manufacturing, Inc., 161 Cal.App.4th 388 (2008) (review granted, no. S163207) and Buckland v. Threshold Enterprises, Ltd., 155 Cal.App.4th 798 (2007). Given the tone of these opinions, it is not unreasonable to wonder whether the outcomes may have been impacted. I'm not suggesting actual impartiality, but tone can sometimes create an appearance of it.