People Ex Rel. Lockyer v. Fremont General Corp.

I. Introduction

The People of the State of California (People), represented by the Attorney General and a number of district and city attorneys, sought civil penalties, restitution, and injunctive relief against Fremont Life Insurance Company (Fremont Life) and its parent company, Fremont General Corporation (defendant) in an action alleging unfair business practices and false advertising under Business and Professions Code sections 17200 and 17500. The People alleged Fremont Life and others operated a “living trust mill” in which salespeople, posing as experts in estate planning, engaged in the unlawful practice of law, advised senior citizens to establish a living trust, and to invest in Fremont Life annuities. Among other things, seniors purchasing the annuities were allegedly not advised of substantial “premium charges” and penalties for “surrender” or death within the first decade after purchase.

Prior to trial, defendant served an offer under Code of Civil Procedure section 998 to allow judgment to be taken against it for $2 million. The People did not accept the offer.

At trial, the People prevailed against codefendant Fremont Life, obtaining injunctive relief,…