Cumbre, Inc. v. State Compensation Insurance Fund

Cumbre, Inc., and Coachella Valley Insurance Service, Inc. (Cumbre), acted as preferred brokers for the State Compensation Insurance Fund (SCIF) until 2003, when the Department of Insurance pressured SCIF to terminate unprofitable brokers. Because Cumbre’s loss ratio was consistently over 80 percent over a three-year period, its contract was terminated. Although SCIF gave brokers an opportunity to appeal the decision, Cumbre was unsuccessful in securing reinstatement because it would have had to exclude a substantial portion of its book of business to bring its loss ratio down to 80 percent. Cumbre sued for damages under several theories. In 2005, the trial court sustained a demurrer to the breach of contract cause of action without leave to amend, and granted SCIF’s motion for summary judgment as to the common law cause of action for violation of fair procedure, and the cause of action for unfair competition.

In a prior opinion, we affirmed the trial court’s order sustaining the demurrer, but reversed the summary judgment on the ground that there was a triable issue of fact. (Cumbre, Inc. v. State Comp. Ins. Fund (May 14, 2007, E040219) [nonpub. opn.].) On remand, the…