State Farm Fire & Casualty Co. v. Superior Court

Petitioners State Farm Fire and Casualty Company and State Farm Mutual Automobile Company (collectively State Farm) are defendants in an action filed by 165 individual plaintiffs who were insured by petitioners and allege a number of claims relating to the Northridge earthquake on January 17, 1994. State Farm filed a demurrer to plaintiffs’ first amended complaint on three grounds which are relevant here: (1) plaintiffs’ fifth cause of action, based on an alleged violation of Business and Professions Code section 17200, failed to state sufficient facts to constitute a cause of action; (2) the court lacks primary jurisdiction over the subject matter of the action until plaintiffs’ complaints are first presented to and addressed by the Insurance Commissioner; and (3) there is a misjoinder of plaintiffs. The demurrer was overruled in its entirety and State Farm has petitioned this court for a writ of mandate.

We find that a cause of action limited to a request for injunctive or restitutive relief can be prosecuted under Business and Professions Code section 17200 based upon an insurer’s alleged fraudulent misconduct and breach of the covenant of good faith implied in every…