Economic Empowerment Foundation v. Quackenbush

57 Cal. App. 4th 677, 67 Cal. Rptr. 2d 323, 97 Cal. Daily Op. Serv. 7300, 97 Daily Journal DAR 11726, 1997 Cal. App. LEXIS 714
CourtCalifornia Court of Appeal
DecidedSeptember 9, 1997
DocketA072693
StatusPublished
Cited by24 cases

This text of 57 Cal. App. 4th 677 (Economic Empowerment Foundation v. Quackenbush) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Economic Empowerment Foundation v. Quackenbush, 57 Cal. App. 4th 677, 67 Cal. Rptr. 2d 323, 97 Cal. Daily Op. Serv. 7300, 97 Daily Journal DAR 11726, 1997 Cal. App. LEXIS 714 (Cal. Ct. App. 1997).

Opinion

Opinion

HANLON, J.

The Economic Empowerment Foundation (EEF) appeals from an order dismissing its complaint and petition for mandate against defendant and respondent Charles Quackenbush, as Insurance Commissioner of the State of California (Commissioner), and real party in interest and respondent the Farmers Insurance Group of Companies (Farmers), after respondents’ demurrers to the complaint and petition were sustained without leave to amend. EEF seeks an award, payable by Farmers, of fees and expenses EEF incurred representing the interests of consumers in proceedings before the Department of Insurance (Department) on Farmers’ applications for certain insurance rate increases.

The issues are whether EEF’s claim for fees is originally cognizable in court under Insurance Code section 1861.10 and, if not, whether EEF is excused under the “futility” exception to the exhaustion of administrative remedies requirement from seeking a fee award from the Commissioner in the first instance. We conclude that the court does not have original jurisdiction over the fee claim, and that EEF must exhaust its administrative remedy before pursuing a court action on that claim. Accordingly, we affirm the order of dismissal.

I. Background

Ratemaking and rate regulation for various classes of insurance are governed by the McBride-Grunsky Insurance Regulatory Act of 1947 as amended (McBride Act), set forth in division 1, part 2, chapter 9 of the Insurance Code (Ins. Code, §§ 1851-1861.16). 1 (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 384 [6 Cal.Rptr.2d 487, 826 P.2d 730]; 1 Cal. Insurance Law & Practice (1997) § 6A.04, pp. 6A-17 to 6A-21.) Provisions for reduction, setting and adjustment of rates were added as *681 article 10 to the McBride Act by Proposition 103 (Prop. 103, § 3), including section 1861.10, which provides: “(a) Any person may initiate or intervene in any proceeding permitted or established pursuant to this chapter, challenge any action of the commissioner under this article, and enforce any provision of this article. [^Q (b) The commissioner or a court shall award reasonable advocacy and witness fees and expenses to any person who demonstrates that (1) the person represents the interests of consumers, and, (2) that he or she has made a substantial contribution to the adoption of any order, regulation or decision by the commissioner or a court. Where such advocacy occurs in response to a rate application, the award shall be paid by the applicant.” 2

The Department has promulgated regulations for payment of fees and expenses (hereafter fees) under section 1861.10, subdivision (b), to consumer-interest interveners and participants (hereafter interveners) in McBride Act proceedings. (Cal. Code Regs., tit. 10, §2662.1 et seq.) 3 Interveners wishing to recover fees must first file a request for a finding of eligibility to seek compensation, which establishes that the intervener represents the interests of consumers. (Cal. Code Regs., tit. 10, §§ 2662.2, 2662.3, subd. (a).) Those found eligible to seek compensation must then file a request for an award of compensation, which details the intervener’s services and expenditures, and describes the intervener’s “substantial contribution” to the proceeding. (Cal. Code Regs., tit. 10, § 2662.2, subd. (a).) The “substantial contribution” must be “evidenced by specific citations to the intervenor’s direct testimony, cross-examination, legal arguments, briefs, motions, discovery, or any other appropriate evidence.” (Cal. Code Regs., tit. 10, § 2662.5, subd. (a)(1).) Compensation may be reduced to the extent that the intervener’s substantial contribution “duplicates” that of another party to the proceeding. (Cal. Code Regs., tit. 10, § 2662.5, subd. (b).) “Duplication” turns on whether the intervener “presented relevant issues, evidence, or arguments which were separate and distinct from those presented by any party or the Department of Insurance staff.” (Cal. Code Regs., tit. 10, § 2662.5, subd. (b).)

The request for an award may be submitted “within 30 days after the service of the order, decision, regulation or other action of the Commissioner in the proceeding for which intervention was sought, or at the requesting intervenor’s or participant’s option, within 30 days after the conclusion of *682 the entire proceeding.” (Cal. Code Regs., tit. 10, § 2662.3, subd. (a).) An intervener may submit amended requests for compensation if it incurs additional fees after a previous request. (Cal. Code Regs., tit. 10, § 2662.4.) The Commissioner issues a written decision determining whether there has been a substantial contribution and specifying the amount of any award. (Cal. Code Regs., tit. 10, § 2662.6, subd. (d).) Awards owed by insurance companies must be paid within 30 days after the Commissioner’s decision, or 30 days after the ruling on any petition for reconsideration or judicial challenge of the Commissioner’s decision. (Cal. Code Regs., tit. 10, § 2662.7.)

EEF intervened in proceedings under Department file Nos. PA-94-003 1-0A and PA-94-0031-OB on Farmers’ applications for rate increases in personal and commercial lines of earthquake insurance, and the Commissioner’s predecessor issued an order determining that EEF was eligible to receive compensation in those proceedings. The order noted that EEF was not “insure[d] [of] compensation" by virtue of the finding of eligibility. To receive an award, EEF would need to submit “detailed substantiating documentation” showing that it had made a “substantial contribution” to the adoption of the final order in the proceedings. On June 2, 1995, the Commissioner issued an order in the proceedings which granted specified rate increases to Farmers.

On June 30, 1995, EEF filed its complaint for declaratory relief and petition for writ of mandate herein. The complaint sought a declaration that EEF was entitled to fees of $187,588.53 for its work in the Farmers’ rate proceedings, plus its fees in court for securing this award. The complaint asserted that the court was authorized to make the award under section 1861.10, subdivision (b). It enumerated the pleadings filed, testimony furnished, witnesses examined, and issues briefed by EEF in the administrative proceedings. It alleged that the issues raised by EEF did not materially duplicate those raised by the Department, and listed the pleadings filed, testimony presented and issues briefed by the Department.

In the alternative to the relief sought in the complaint, the petition requested an order finding that the Commissioner was “disqualified” to rule on EEF’s request for fees, and directing that the Commissioner award fees to EEF in an amount to be determined by the court. The petition alleged that the Commissioner had “engaged in a public campaign of hostility” against consumer intervention in Department proceedings generally, and against EEF specifically.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Blum v. Markusic CA1/5
California Court of Appeal, 2025
Spears v. Spears
California Court of Appeal, 2023
Brown v. Bank of America, N.A. CA5
California Court of Appeal, 2023
State Farm General Insurance Company v. Lara
California Court of Appeal, 2021
Samoa Pacific Group v. Crandall CA1/5
California Court of Appeal, 2015
Linda Vista Village San Diego Homeowners Ass'n v. Tecolote Investors, LLC
234 Cal. App. 4th 166 (California Court of Appeal, 2015)
Eagan Avenatti, LLP v. Parrish CA4/3
California Court of Appeal, 2014
Association of California Insurance Companies v. Poizner
180 Cal. App. 4th 1029 (California Court of Appeal, 2009)
TracFone Wireless, Inc. v. County of Los Angeles
163 Cal. App. 4th 1359 (California Court of Appeal, 2008)
City of San Jose v. Operating Engineers Local Union No. 3
73 Cal. Rptr. 3d 159 (California Court of Appeal, 2008)
Imagistics International, Inc. v. Department of General Services
59 Cal. Rptr. 3d 18 (California Court of Appeal, 2007)
Smith v. Wells Fargo Bank, N.A.
38 Cal. Rptr. 3d 653 (California Court of Appeal, 2006)
Grinzi v. San Diego Hospice Corp.
14 Cal. Rptr. 3d 893 (California Court of Appeal, 2004)
Kong v. CITY OF HAWAIIAN GARDENS REDEVELOPMENT AGENCY
134 Cal. Rptr. 2d 260 (California Court of Appeal, 2002)
Unnamed Physician v. Board of Trustees of Saint Agnes Medical Center
113 Cal. Rptr. 2d 309 (California Court of Appeal, 2001)
Glue-Fold, Inc. v. Slautterback Corp.
98 Cal. Rptr. 2d 661 (California Court of Appeal, 2000)
Barthelemy v. Orange County Flood Control District
76 Cal. Rptr. 2d 575 (California Court of Appeal, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
57 Cal. App. 4th 677, 67 Cal. Rptr. 2d 323, 97 Cal. Daily Op. Serv. 7300, 97 Daily Journal DAR 11726, 1997 Cal. App. LEXIS 714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/economic-empowerment-foundation-v-quackenbush-calctapp-1997.