Daily Journal Top 100 Lawyers 2013 – Viau & Kwasniewski

October 30, 2013


Gary K. Kwasniewski, was selected as one of the top 100 lawyers in the entire state of California for 2013.  He and his partner, Jeanette L. Viau, achieved this recognition from the Los Angeles and San Francisco Daily Journal, the largest legal publication in California for their role in the California Supreme Court’s recent unanimous decision in Zhang v. Superior Court (2013) 57 Cal.4th 364.

In Zhang, the San Bernardino County Superior Court sustained California Capital Insurance Company’s demurrer to the Zhang/Viau & Kwasniewski Complaint’s Third Cause of Action for unlawful business practices under the Unfair Competition Law (UCL), Business and Professions Code sections 17200, et seq.

Viau & Kwasniewski filed a Writ.  The Fourth District Court of Appeal granted the Viau & Kwasniewski Writ.

The Fourth District held that Zhang’s allegations that the insurer engaged in false advertising by promising to provide appropriate coverage under its policies in the event of a covered loss stated a valid cause of action.  Viau & Kwasniewski alleged that the insurer in fact had no such intent to honor the promise to properly pay – by its purposeful undervaluation of Ms. Zhang’s covered losses (fire to her apartment complex).  For example, Viau & Kwasniewski contended that in determining the cost to restore Ms. Zhang’s damaged property, the insurer improperly applied across the board depreciation of 35%.  Proper depreciation requires thoughtful consideration of what can be depreciated, and in what amount.  Viau & Kwasniewski took the position that simply because Ms. Zhang’s UCL claim involved conduct also proscribed by the UIPA, Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287 did not bar the claim because it was concomitantly premised on allegations of false advertising.

The insurer argued that the UCL allegations were an attempt to seek recovery for violations of Insurance Code section 790.03(h) (Unfair Insurance Practices Act – UIPA), which is proscribed by the California Supreme Court’s decision in Moradi-Shalal.  The insurer further cited to the case of Textron Financial Corp. v. Nat’l Union Fire Ins. Co. (2004) 118 Cal.App.4th 1061, where the Court of Appeal held that the unfair practices alleged in that insured’s Complaint were “the type of activities covered by the UIPA,” and that “merely alleging these purported acts constitute unfair business practices under the unfair competition law is insufficient to overcome Moradi-Shalal.”  Textron, supra, 118 Cal.App.4th at 1070 – 1071.

The Textron decision caused a split in Court of Appeal opinion as to whether an insured may allege UCL violations against an insurance company, where the carrier’s claims handling practices are also prohibited by the UIPA.

Viau & Kwasniewski and California Capital both agreed that the Supreme Court needed to resolve the issue.

On August 1, 2013, the Supreme Court issued its decision, unanimously holding that the Fourth District Court of Appeal was right – claims for relief under the UCL could be based on conduct proscribed by the UIPA, if such claims are independently actionable under other laws.  This includes false advertising, or even the common law of bad faith:  “Textron’s holding that Moradi-Shalal precludes UCL causes of action based on allegations of bad faith claims handling practices is contrary to the reasoning of” the Supreme Court’s own holdings in Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, Stop Youth Addiction, Inc. v. Lucky Stores, Inc. (1998) 17 Cal.4th 553, and Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163.

The Supreme Court expressly disapproved Textron to the extent it is inconsistent with the Court’s opinion in Zhang.

Gary K. Kwasniewski and Jeanette L. Viau recall very clearly the day Textron was published.  They telephoned counsel representing the insured in that case, to find out what happened.  Viau & Kwasniewski are genuinely humbled and grateful that a case on which they worked clarified the law, and helped consumers and insureds in the State of California.